Commercial Insurance Guidance Notes

<body topmargin=0 leftmargin=0 marginheight=0 marginwidth=0> <table cellpadding=0 cellspacing=0 border=0 height="100%"><tr> <td valign="top" width=22.5% BGCOLOR="#006633" TEXT="#F7F7FF" background="136d6c20ddvuru.jpg"> <div> <IMG SRC="1dd84d80.jpg" border=0 width="132" height="216" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></div> </td> <td valign="top" BGCOLOR="#FFFFFF" TEXT="#080000"> <div> <B> </B><FONT SIZE="1" COLOR="#003366" FACE="Arial" >  </FONT></div> <div>  <A HREF="index.htm" TARGET="_top" TITLE=" "><U>home</U></A> <FONT SIZE="2" COLOR="#000000" FACE="Tahoma" > l </FONT>   <A HREF="id20.htm" TARGET="_top" TITLE="Covers Available"><U>Covers Available</U></A>   |   <A HREF="id28.htm" TARGET="_top" TITLE="Declaration of Status and Terms of Busin"><U>Declaration of Status and Terms of Business - EFM General Insurance Division   </U></A>   |   <B>Commercial Insurance Guidance Notes</B>   |   <A HREF="id17.htm" TARGET="_top" TITLE="Commercial Property Owners Guidance Not"><U>Commercial Property Owners - Guidance Notes </U></A>   |   <A HREF="id27.htm" TARGET="_top" TITLE="Asbestos at Work Regulations 2002"><U>Asbestos at Work Regulations 2002</U></A>   |   <A HREF="id30.htm" TARGET="_top" TITLE="Commercial Insurance Technical informat"><U>Commercial Insurance - Technical information</U></A></div> <div> Commercial Insurance Guidance Notes</div> <DIV ALIGN="LEFT"></DIV> <div> <TABLE BORDER="0" CELLPADDING="2" CELLSPACING="1" WIDTH="563" BORDERCOLORLIGHT="#C0C0C0" BORDERCOLORDARK="#808080" FRAME="BOX" RULES="ALL" HSPACE="0" VSPACE="0" BGCOLOR=#FFFFFF > <tR> <tD VALIGN=TOP BGCOLOR=#FFFFFF HEIGHT= 161 WIDTH="557"><div> <IMG SRC="21865290.jpg" border=0 width="101" height="41" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></div> <div> efm<FONT SIZE="5" COLOR="#003366" FACE="Arial" >insurance</FONT>&<FONT SIZE="5" COLOR="#003366" FACE="Arial" >financial</FONT>group</div> <bR> </tD> </tR> </TABLE></div> <div> <B>COMMERCIAL INSURANCE </B></div> <bR> <div> <B>GENERAL GUIDANCE NOTES</B></div> <bR> <div> This set of guidance notes has been prepared purely as a source of reference. It is general in it's nature and represents our understanding of current practices and is not intended to apply specifically to covers effected / quoted or to be regarded as a substitute for legal advice.</div> <bR> <div> For full details of Terms, Conditions and Exceptions,</div> <div> reference must be made to the policy documentation including current Schedules and endorsements.</div> <bR> <div> <B>Business Description</B></div> <div> It is important, particularly in respect of Products Liability Insurance that all aspects of the business are included in the Business Description (shown on the policy schedule). Any product types previously supplied should also be shown. Usually, the insurance cover applies only to the activities disclosed to your Insurer as shown on the current policy Schedule.</div> <div>       </div> <div> If this description is not accurate Insurers must be advised immediately.  It is important to keep the description up to date, e.g. following a change in your trading activities, introduction of new product types or other material developments.  Any anticipated changes should also be notified.</div> <div>       </div> <div> <B>Warranties / Conditions</B></div> <div> Specific warranties and Conditions which apply to Insurance Policies can be found in the policy documentation and must be strictly complied with as failure to do so will invalidate the Policy, (even if the cause of loss is unconnected with the Warranty).  If you are unable to comply with the terms of a Warranty or Condition, you should advise us immediately.</div> <div>       </div> <div> <B>Exclusions</B></div> <div> We strongly recommend you refer to the policy documentation for specific details.</div> <div>       </div> <div> <B>Reasonable Precautions</B></div> <div> There is a common law duty on all insurance policyholders to act as if uninsured and to take all prudent and reasonable steps to both prevent injury or damage of the type covered by insurance and to take all such actions after the event as are sensible to minimize the loss.</div> <div>       </div> <div> This duty is reinforced in many policies by the incorporation of a specific "reasonable precautions" condition.  With or without this condition, however, failure to act in a reasonable manner may invalidate cover or prejudice a claim.</div> <div>       </div> <div> <B>Security</B></div> <div> It is essential that notification is given to the Insurer before any alterations are made to security at the premises or if changes are made to the maintenance arrangements of the alarm or fire extinguishers or if any warnings are received by you regarding the withdrawal / downgrading of Police response or Central Station Services, where applicable. </div> <bR> <div> <B>Underinsurance - “Average clause”</B></div> <div> In the event that the Sum Insured is found to be inadequate at the time of a loss, Insurers</div> <div> can invoke the “Average Clause” which will have the effect of proportionally reducing a claim settlement by the extent to which the Sum Insured is found to be inadequate.</div> <div>       </div> <div> <B>Reinstatement</B></div> <div> The cover provided by a Commercial Insurance policy for Buildings, Machinery, Plant and General Contents (all as defined in the Policy Wording) is usually arranged on a “Reinstatement” basis.  Insurers undertake to settle a claim on the basis of the cost of replacing the lost or damaged property by similar property, equal to but not better or more extensive than when it was new.  It is important that sums insured (or Declared Values see next paragraph) are maintained at an adequate level to ensure that they are adequate at the time of reinstatement following a loss.</div> <div>       </div> <div> You should ensure that the Sums Insured are adequate to allow for the full cost of reinstatement of the property including professional fees, debris removal costs, any non recoverable VAT. Where the Sum Insured is not subject to “index linking”, an allowance should also be allowed for the effects of inflation since the Sums Insured were last reviewed.</div> <bR> <div> <B>The "Day One" Reinstatement Basis</B></div> <div> The need to select a sum insured adequate at the time of reinstatement causes problems in assessing an accurate figure to cater for the effects of inflation during the policy period and throughout the period of reinstatement.</div> <div>       </div> <div> The "Day One" Basis of Reinstatement requires only that the “Declared Value”, at the first day of the policy period, is adequate and average will be applied only if it is not.  The Declared Value is automatically increased by a specified percentage to produce the total sum insured to provide additional protection for the effects of future inflation. Your policy will show if the “Day One” basis applies. Please let us know if further information is required.</div> <div>       </div> <div> <B>Adequacy of Sums Insured/Declared Values</B></div> <div> Where there is any doubt regarding the adequacy of your Sums Insured / Declared Values, we recommend that advice is sought from a professional Valuer and a Reinstatement Valuation obtained.</div> <div>       </div> <div> <B>Terrorism Exclusion (Property, Business Interruption and third Party Liability)</B></div> <div> With effect from 1st January 2003, the vast majority of Commercial Insurance covers are subject to a total exclusion of claims arising from Terrorist activities (as defined), other than Employers Liability (Limit £5m). Previously, cover was subject to an inner limit of £100,000 in respect of Buildings, Contents and Business Interruption losses.</div> <bR> <div> Cover for Terrorism “All Risks” (as defined) is available, to the full Sums Insured of the Property Damage and Business Interruption Sections of the Policy by separate arrangement. We will be pleased to obtain a quotation on your behalf on receipt of your instructions.</div> <bR> <div> Facilities also exist to provide Terrorism cover in respect of Public Liabilities (and Employers Liability “Top up” cover) and we will be pleased to investigate this option, if required.</div> <div>  </div> <div> <B>Business Interruption / Loss of  Profits / Consequential Loss</B></div> <div> Cover is normally available for businesses wishing to protect themselves against reduction of Business Gross Profit and the additional expenses incurred by the business to avoid or minimise the loss of Gross Profit following interruption to the business following an insured event at the premises.</div> <bR> <div> The Estimated Gross Profit figure should be checked to ensure that it remains adequate for the forthcoming policy period and should reflect anticipated trading. Where the Gross Profit is shown as a “Sum Insured”, it is essential to ensure that this is maintained at an adequate level since this is subject to the “Average / Underinsurance Clause”. </div> <bR> <div> The Gross Profit figure should be reviewed in accordance with the “Gross Profit” definition which can be found within the relevant section of the policy wording</div> <bR> <div> <I><B>Declaration Linked basis</B></I></div> <div> Where shown on the policy schedule, the “Estimated Gross Profit” is subject to an uplift of 33% to allow for exceptional trading.  A declaration of actual Gross Profit for the period of insurance will be required at expiry of the policy.</div> <bR> <div> <I><B>Maximum  Indemnity Period</B></I></div> <div> This is an essential feature of the Business Interruption / Loss of Profits cover and should be selected with care. Consideration should be given to the longest period of time that the business activities could be affected by a serious loss at the premises.</div> <bR> <div>      Considerations should include the following :</div> <div>      Replacement of lost custom</div> <div>      Reinstatement period of Buildings (allowing for planning delays)</div> <div>      Availability of specialized Machinery and Plant</div> <div>      </div> <div> The Maximum Indemnity Period should represent the period of time which your business will require to re establish it's pre loss profitability. A “Maximum Indemnity Period” of 12 months should be considered as a minimum.</div> <bR> <div> <I><B>Back up of critical business data</B></I></div> <div> It is generally recommended that a regular backup of computer files and data should be undertaken at least weekly and stored away from the business premises (preferably restored into a computer located at remote premises). This should minimize the chance of delays in resumption of trade as a result of inability to regain access to essential business data. </div> <bR> <div> <B>Employers Liability</B></div> <div> Amendments to Employers Liability Regulations require that Employers must now keep Employers Liability Certificates (or a copy) for 40 years from the effective date</div> <bR> <div> <I><B>Associated Companies</B></I></div> <div> An “Associated Company” - one that is not a Subsidiary Company- constitutes a separate Employer and as such must arrange Employers Liability insurance in it's own name.</div> <bR> <div> <I><B>Subsidiary Companies</B></I></div> <div> The Employers Liability Certificate must identify whether the Employers Liability cover applies to the Holding company and all, or named, subsidiaries. Where subsidiaries are not individually named, there is a requirement to specify any not covered by the policy.</div> <div>  </div> <div> <B>Disaster Planning / Business Continuity</B></div> <div> It is strongly recommended that a formal Disaster Plan is established by the Company and regularly updated. This will help minimize disruption to the business performance and the period necessary to resume pre loss trading.</div> <bR> <div> <B>Asbestos Identification and Management - The Control of Asbestos at Work Regulations 2002</B></div> <div> As a result of the increasing numbers of people who contract asbestos related diseases, the Control of</div> <div> Asbestos at Work Regulations 2002 were introduced.</div> <bR> <div> The legislation refers to “dutyholders”, which are defined as anyone who has the responsibility for</div> <div> maintenance or repairs within non-domestic premises. This duty is often passed to the tenant by the terms of the lease. However, where there is no such obligation, for example where the premises are unoccupied, then the duty reverts back to the person who is in control of the property.</div> <div> Although the regulations relate to “non domestic” premises, they do place duties on landlords with</div> <div> responsibility for housing developments or blocks of flats which have common parts, such as lifts and lift</div> <div> shafts, corridors, foyers, boiler houses etc.</div> <bR> <div> Dutyholders are required to:</div> <div> Take reasonable steps to find materials likely to contain asbestos and determine its condition</div> <div> Presume materials contain asbestos unless there is strong evidence to suppose that they do not</div> <div> Make and keep up-to-date a written record of the location and the condition of the asbestos and presumed asbestos containing materials (ACMs)</div> <div> Complete an assessment of the likelihood of anyone being exposed to asbestos fibres from these materials</div> <div> Prepare a plan to manage the risk from these materials and take steps to put it into effect to ensure that:</div> <div> known or presumed ACM is kept in a good state of repair</div> <div> known or presumed ACM which because of its location and/or condition is repaired or, where necessary, removed</div> <div> information on the location and condition of this material is given to anyone at risk. This will include visitors to the site who may work in areas where this material is present</div> <div> Once completed, the plan should be periodically monitored and reviewed to ensure that the control measures are adequately protecting your staff and others</div> <bR> <div> Although the regulations do not specifically require a survey to be completed, this would identify, so far as reasonably practicable, the presence and extent of any known or suspected ACMs. It will also identify</div> <div> necessary action that needs to be taken to put into place a system to manage ACM.</div> <bR> <div> Alternatively the dutyholder can use historical knowledge, plans, building specifications and other supporting documentation to show that materials do not contain asbestos.</div> <bR> <div> <B>The information contained in this report is of a general nature and does not necessarily reflect the particular insurance arrangements in place. If clarification of any point raised in these guidance notes is required, or if information is required in respect of any matter not included in these notes, please do not hesitate to contact us</B></div> <bR> </td> </tr></table></body>