Why insurance readiness can make big differences to how your insurance policy performs

By Jack Durrant, Associate Director, BA (Hons), ACII

Navigating changes in your business is vital, and insurance readiness plays a pivotal role. I frequently engage with clients dealing with various changes, both planned and implemented. However, the approach to notifying me of these changes varies greatly.

Take for instance a customer who received a substantial piece of equipment. Although they intended to purchase it and had the funds, I was unaware until it arrived at their doorstep. Imagine the challenge when they called and said: “Hi Jack, the new crane is here. Can you arrange fleet, inspection, and plant insurance?”

Well, of course I can help with that, but this leaves me and the customer in a tough spot for a couple of reasons.

·       The plant would potentially be uninsured until added that day, creating additional exposure to the client

·       Insurers will know that the change has been badly managed by either/or both myself and the client and might influence their decision and cost

·       Brokers don’t have the time to negotiate effectively, and if brokers do try to negotiate, insurers will know it prolongs the uninsured exposure

·       The client won’t legally be able to use the plant on the road until confirmation of cover has been obtained

So, to summarise, addressing this after the fact, or post-delivery creates issues such as potential lack of coverage, negative impact on insurers' decisions and costs, and legal restrictions on using the equipment.

This scenario, though common, may be avoided through proactive planning and communication with your broker. Despite brokers' having a reputation for needing detailed information, involving them in your business changes is essential for consistent and reliable results. Even seemingly minor policy adjustments require disclosure, ensuring accurate information reaches insurers. The insurance contract intricacies demand thorough checks, highlighting the importance of keeping your broker informed about planned changes to prevent potential issues.

We as brokers and you as a client have a duty to the insurers to disclose accurate information (see our podcast here), and as a part of this we have a duty to keep insurers informed of even minor adjustments. A client changes their name, but effectively everything else stays the same – we carry the duty to inform the insurers of this change. In fact, it’s central to the contract. For example, the insurance contract is usually made out in the name of “ABC Limited & Subsidiaries of ABC Limited” Then it changes to “ABC and Partners Limited & Subsidiaries of ABC and Partners Limited”. For something so simple it’s worth staying well ahead of the game and letting your broker know of planned changes – even the small ones –   to make sure you don’t fall foul of “duty to disclose”, and your broker has the change to implement the changes as quickly as you need them.

Having witnessed many examples of this, I’m confident that this could impact your ability to claim on a policy – simply because the brokers and insurers would require their own checks against a sanctions list, and even checks against the Companies House and directors list to ensure the risk doesn’t have any further features which might impact the underwriting. We are, however, drifting into technicalities.

So, whether it's a small tweak or a significant shift in your business, consulting your broker ensures you're prepared for any insurance implications that might affect your business in the future.