Commercial Property Owners - 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>   |   <A HREF="id16.htm" TARGET="_top" TITLE="Commercial Insurance Guidance Notes"><U>Commercial Insurance Guidance Notes</U></A>   |   <B>Commercial Property Owners - Guidance Notes </B>   |   <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 Property Owners - Guidance Notes </div> <DIV ALIGN="LEFT"></DIV> <div> <TABLE BORDER="0" CELLPADDING="2" CELLSPACING="1" WIDTH="561" BORDERCOLORLIGHT="#C0C0C0" BORDERCOLORDARK="#808080" FRAME="BOX" RULES="ALL" HSPACE="0" VSPACE="0" > <tR> <tD VALIGN=TOP HEIGHT= 16 WIDTH="555"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="16" ALIGN="bottom" WIDTH="555" HSPACE="0" VSPACE="0"></tD> </tR> </TABLE></div> <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> <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> <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>Ongoing Duty of Disclosure of Material information and changes to material facts</B></div> <div> The premium and cover provided by any insurer is based upon facts previously disclosed and it is essential that any material changes of fact are disclosed immediately to ensure that the policy will not be prejudiced at the time of a loss.  As to whether a fact is considered material depends upon the nature of the risk insured. For example, it could include an insured property becoming unoccupied or change of activities being undertaken by the tenant.</div> <bR> <div> <B>Terrorism</B></div> <div> With effect from 1st January 2003, significant changes have occurred in respect of the provision of cover for Terrorism. Previously, the vast majority of Commercial Insurance covers provided an “inner Limit” of £100,000 in respect of all items insured under the Buildings Section of the policy (and an additional £100,000 for Rent Receivable if applicable). It has previously been possible, by separate arrangement, to provide extra Terrorism cover (beyond the £100,000 limits, to the full value of the Property / Rent Sums Insured). </div> <bR> <div> However, from 2003 the limited Terrorism cover will cease to be provided in all but a few cases (i.e. by certain insurers for package policies). In most cases, Terrorism cover will be <U>excluded entirely</U> from the standard policy wording.</div> <bR> <div> Cover for “All Risks” Terrorism (as defined) is available to the full Sums Insured of the Material Damage / Property and Rent aspects of cover, subject to additional premium. If a quotation for Terrorism is required, please let us know and we will be pleased to obtain terms from Underwriters.</div> <bR> <div> The Renewal documentation / Policy Wording supplied will indicate whether Terrorism cover in it's limited form applies or whether Terrorism is excluded entirely. </div> <bR> <div> <B>Business Description / Activities Insured</B></div> <div> Any liability cover provided by an Insurance policy applies only to the activities disclosed to the Insurer.</div> <bR> <div> If this description is not accurate you must advise us immediately.  Any anticipated changes should also be notified.</div> <bR> <div> <B>Warranties / Conditions </B></div> <div> Specific Warranties and Conditions which apply to Insurance Policies can be found in your 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 fully with the terms of a warranty or Condition, you should advise us immediately.</div> <bR> <div> <B>Exclusions</B></div> <div> We strongly recommend you refer to the policy documents for specific details.</div> <bR> <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> <bR> <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> <bR> <div> <B>Security / Fire</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 of Police 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 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 inadequate.</div> <bR> <div> <B>Reinstatement</B></div> <div> The cover provided by a Commercial Insurance policy for Buildings (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” if shown in the Policy Schedule) are maintained at an adequate level to ensure that they are adequate at the time of reinstatement following a loss.</div> <bR> <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. The Insurance value for Buildings should be based upon the total cost of reinstatement not the Market Value.</div> <bR> <div> <B>"Day One" Reinstatement Basis / Declared Values</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> <bR> <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 (“Declared Values” would be shown in the policy Schedule if this basis applies). Please let us know if further information is required.</div> <bR> <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 Buildings valuer. </div> <bR> <div> <B>Loss of Rent Receivable</B></div> <div> Where applicable, the policy can be extended to protect against the loss of Rent Receivable. This is usually based upon an annual Rent Sum Insured and will normally be shown as a separate item on the Insurance Schedule.</div> <bR> <div> The Maximum Indemnity Period for Rent Receivable can be based on 12, 24 or 36 months. Care should be taken to select an appropriate Indemnity period to reflect the particular circumstances of the property insured .i.e. allowing for the length of time the property would take to be reinstated after an insured loss.</div> <bR> <div> <B>Employers Liability / Property Owners Liability</B></div> <div> Where the Property Owner employs (i.e. Clerical, Caretakers, Maintenance), it will be necessary to effect Employers Liability Insurance cover to comply with compulsory Insurance Regulations. This is particularly important in respect of Limited Companies who's Directors are considered to be Employees for the purpose of the Regulations. </div> <bR> <div> Property Owners Insurance cover is usually available under a Property Owners Insurance arrangement.</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> <bR> <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> <bR> </td> </tr></table></body>