Many schools will be preparing to renew their property and liability insurance. For most, this will be a tedious exercise to be endured. However, the important ‘duty of disclosure’ to inform the insurer of any ‘material facts’ still lies with the insured: any error in this respect can tip it over into the exciting category for all the wrong reasons. Here are seven key factors to consider.
Buildings sum insured
Have you taken on any new buildings since renewal, are you building anything new, or have you had an independent valuation carried out? A delay in telling your insurer that your buildings values have increased significantly after a valuation could leave you knowingly underinsured if a major loss were to occur, and might allow the insurer to dispute the claim. Likewise, if a new build is destroyed by fire before completion, and if the insurer had no knowledge of its existence, they may decline to pay.
Have any buildings become unoccupied or has their use changed since your last renewal? Unoccupied buildings normally attract special conditions around alarms, heating and regular checks. Failure by a school to inform the insurer about vacant occupancy could lead to a lengthy debate about the validity of any claim.
According to the 2014 Information and Communications Technology Survey carried out by the Independent Schools Bursars’ Association (ISBA), 60% of the 270 schools surveyed are planning to increase their ICT budgets. Portable items such as iPads are easy to lose or damage, and often get left off the computer sums insured. Asset management companies can carry out a full audit of your asset register, security-tag all of your contents and computers, and provide replacement values and locations. In the event of a fire, this makes it much easier to know what has been lost and the cost of its replacement.
Contents values are often based on a percentage of your buildings sums insured, so you may find yourself either over- or under-insured in this area. Additionally, it is worth checking the excess on the computer section of your policy, as some insurers can offer competitive terms with a nil excess.
If your income has increased, make sure that you adjust your loss of revenue figures accordingly in the event of an interruption to your business. Also look at the indemnity period for your additional increased cost of working. Twenty-four months may be cutting it fine if there are complications with planning permission and other issues, which can result in a delay of months before any rebuilding work starts. Thirty-six months is a better safety margin.
National Insurance and pension contributions should be deducted from this figure. The ratings for many of the liabilities are calculated on the wage roll so, if you include NI and pension contributions, you may be paying more unnecessarily.
Have you done anything that improves your fire protection, health and safety or security? The installation of sprinklers or a fire suppression system in the kitchen will attract significant discounts from some insurers.
Business Continuity Plans
Insurers are taking more interest in these, and penalising schools where they do not exist. There are practical advantages of having an up-to-date plan, and insurance renewal is a good time to review yours.
Finally, if you are coming to the end of a long-term agreement, do consider the benefits of asking another broker to quote for you. Rolling over with your current provider may be an expensive option, particularly if you have not tested the market for some time and are not aware of what else is available.
Martin Linaker is Independent Education Director of Oval Insurance Broking
Contacts T: 01243 793784 E: email@example.com