Can I save money on my business premises insurance during lockdown?

Business Premises Insurance in the Lockdown.

Lockdown has resulted in many businesses going into hibernation and business premises temporarily shuttered. There are, however, things you must do as the insured even in these circumstances.

You will have a number of policy obligations in the “Statement of Facts” which came with your insurance contract documentation.

Your businesses premises.

If you own your property without any others having rights over it (like your bank or building society) then premises insurance is optional… But, it would be incredibly short sighted not insure it as one of your most significant assets!

Also, the local authority may be able to force you to rebuild a destroyed building even if you were uninsured and do not want to rebuild – insurance is important!

We will assume that you have insurance and, for most people, your business premises:

• Is leased and you are tenants,
• You own it with a mortgage,
• Your building is acting as security for a bank loan or similar.

The landlord, the mortgagor and the bank each have very strong reasons to require you to keep the property fully insured. If you choose not to, the landlord could use it as a reason to evict you or, you may be in breach of the mortgage contract and/or the loan, or one secured on it, could be called in.

When you got your quote, you will have described the premises and the safety features that protected it. A number of these features will be required to remain in place and maintained through-out the period of the insurance – for example anti-fire and theft systems.

What can I look at to save money?

Here are 3 important things to consider:

1. Mortgages & Leases. You probably have a continuing obligation to insure the building, fixtures and fittings. A suspension or termination of the policy to recoup some of the premium will mean you might be jeopardising your right to keep the lease and/or risking the bank revoking the mortgage or a premises secured loan.
2. Fire and Theft Alarms. Ensuring that maintenance checks are done even during suspension of operations may be your responsibility. Cancelling security monitoring contracts that were in place at the start of your policy could invalidate your insurance so, it is imperative that you speak to your broker or insurer to discuss the situation first.
3. Unoccupied Premises. If you leave your premises unoccupied then check your policy as you may need to put in place extra safety measures. At the very least, your policy will usually say for unoccupied periods of more than 30 days you must tell your insurers. The insurers may reduce the scope of the cover but maintain a degree of cover to keep the bank and landlord happy. Remember too to tell your landlord – he has business premises insurance too.

If you do not tell the insurer of changes to your use of the premises, a loss on the premises mean that your claim is rejected entirely.

If you are going to shutter your premises for an extended period, we strongly recommend;

• Read through your policy to see what are the consequences and possibly get advice from your broker,
• Check what risks will be covered by the insurer while unoccupied and,
• Remove any valuable assets (high value stock, your IT etc) to somewhere safer (and consider the data risks if your hard drives are stolen!).

IN SUMMARY

Like us, you’ve probably got some time on your hands. Review your insurance and to see if you can save a few pounds or get the right cover!

So, if appropriate:

• Talk to your broker or insurer directly and ask for a mid-term adjustment or new quote if your risk has changed. if;
  • Your staff numbers have reduced significantly, the business changes or turnover projections are changed (lower or higher) and a substantial part of the insured period remains, say 3 months. Read our blog on reducing premiums through operations.
• Check your insurance to see if you can reduce your premiums on premises.
• Look at the security and location of your stock and see if you are over-insured for the amounts you require.

After all of these measures, if it makes sense to cancel your business premises insurance then check your policy to see what rights to return premium you have.

In general, always be ready to have a constructive conversation with your insurer about your circumstances and what you should pay.

While it is not easy to forget the vital work going on by many people during this lockdown, we must also remember the importance of micro-businesses to our economy. If you’ve read this, you may be thinking about not returning to self-employment after lockdown – just remember, when it is time to, let’s all get back to work!