Over the course of the last few months, we have been asked to carry out an insurance policy review for an architect, a property owner, a construction contractor and a software development company. All of whom were confident that the insurance policies they had purchased online were all-inclusive and provided them with the most suitable level of care for their needs, with no gaps. Every one of them was wrong.
Insurance Policy Review: Architect
The director of our architect client had purchased an online policy with a market leading provider that has a AAA rating. As an architect, this client was designing both residential and commercial projects, as well a providing consultancy services, producing feasibility reports and completing value engineering projects. None of which was covered on their online insurance policy, which only provided basic coverage as a draughtman for small domestic extensions. Although their online policy was a competitive price at just £345, it was completely worthless. Returning to his provider, he requested that his policy be updated to cover him completely, they were unable to provide him any advise or help and told him that he needed to speak to a broker.
We explained to the architect that although he had selected the correct profession for his online insurance policy, he hadn’t detailed the scope of his work and that was why he had a policy that was effectively useless. We then requoted his policy for him, finding him the most competitive rate at £1973, using the same company that he had already purchased his online policy through and covering everything the client needed.
Insurance Policy Review: Property Owner
Our property owner client was a successful entrepreneur with a massive portfolio of 30 properties, all in and around the London area. He was recommended to us as he was having problems with a liability claim with one of his tenants. A cupboard door had fallen off and hit the tenant in the head, causing a very small cut and some bruising to her face. It wasn’t a major issue, but it was made more problematic by the fact that the property owner wasn’t covered by his insurance. The property that the incident occurred in was let to a housing provider on a five-year lease, this housing provider had in turn collaborated with the council and was providing long-term housing for anyone who needed it, including asylum seekers, single mums, abused housewives, ex addicts, ex-offenders etc. The property owner had selected a policy that would allow him to accept local authority referrals, believing that he would be covered as all referrals were DSS, however, this wasn’t the case.
The client faced two problems with his insurance policy. The first was that the policy required him to have a tenancy agreement directly with the tenant, not through a housing association. The second was that the insurance company did not cover temporary housing and even though the tenant had been in the property for more than eight months she was on a temporary licence, not an AST. After speaking to this property owner, we discovered that all of his properties had unsuitable insurance policies and to hinder the situation further, each property was insured through a different insurer, via numerous different brokers. These unsuitable insurance policies were costing the client £13,000.
We, therefore, collated the first 15 of his 30 properties onto a single contract and due to the premium spend, he received suitable insurance policies for £16,000. Now, the client has the peace of mind that his properties are properly insured, as well as having only one renewal date, instead of dozens per year. The remainder of his 15 properties were all covered correctly, therefore these will just be added to his portfolio as they fall for renewal.
Insurance Policy Review: Construction Contractor
Our next client, the construction contractor who earned a living building new houses, extensions, completing commercial works and converting offices into apartments, had taken out his insurance policy online, many years ago, and hadn’t reviewed it since. Until he was asked to present his liability documents for a new job, who required that he have a minimum of £5 million public liability cover, a contract works cover for a minimum of £200,00 and confirmation that his policy covered labour sub-contractors and bona fide sub-contractors. Producing the paperwork, his contract was rejected on the basis that his insurance policy did not meet any of these standards required.
The client approached us confused and annoyed. He was under the impression that his public liability policy covered the work he was carrying out and that any labour sub-contractors needed their own liability insurance as they were only temporary workers. After explaining to him that this wasn’t the case and that all labour only contractors should be treated the same as an employee, we reviewed his insurance policies. Since he had taken out the policy five years ago, his business had grown, his turnover had increased and he was now directly employing eight full-time tradesmen. The £650 policy he had purchased five-years ago no longer covered the large-scale company he had now established; his turnover had increased by tenfold. We fully reviewed his requirements and found an insurance policy that covered everything he needed for £4375, this cover included all of this main contractors, but also his plant and machinery, which in turn saved the client hundreds of pounds in hiring charge costs.
Insurance Policy Review: Software Development Company
We were also asked to review a software development company, who had taken out their policy online six years ago, covering office contents and a professional indemnity. The policy had been renewed each year, but had never been reviewed once, it was never a suitable policy for the company. To begin, when the company first took out the policy, they described their business as an IT services company, not a software design company, which is completely inaccurate. Over the six years they had this policy, their turnover had grown from £100,000, to £1.5 million a year and was expected to double again the following year. In addition, their staff grew to 12 full-time programmers writing and testing software, and the IT equipment that they now owned had more than quadrupled in value. None of these changes had been communicated to the insurer, as such, the £295 insurance policy they were paying for, was no longer suitable for their company needs and didn’t cover their activities.
We sourced them a suitable insurance policy with Hiscox Insurance. While the quote was for £3800, much more than what they were currently paying, and covered all their activities and equipment. However, when we communicated the quote to the client, they did not believe that this was the best price available, they believed that because the quote was so much higher than what they are currently paying, that we were simply trying to rip them off. We explained the reason for the price increase, we showed the company how their policy did not cover them and what they could potentially lose, and we answered their questions. However, they completely disregarded our quote and refused to discuss the matter with us any further. As saddening as this was, there was nothing more we could do for this company, you can’t win all battles, but at least we tried our best. Since, the company has sadly suffered a loss following a burglary and their claim was unfortunately turned down, as we predicted.
What We Found
As we have learned from these case studies, online websites provide easy access to insurance, however, they cover is only as good as the person inputting the details. Moreover, online providers mostly provide an execution service only, the operators do not usually have the knowledge or skills to be able to provide the end-user guidance or advice. Brokers, on the other hand, have extensive knowledge, giving them the ability to guide customers through the insurance maze to match them to a suitable insurance policy. Brokers not only save their customers time and money, but they also make sure the policy covers the company for every eventuality, so that they never find themselves with a declined insurance claim.