A Guide to Professional Indemnity, Should the Cost of Insurance Be Capped for Young Drivers, Plus More

Welcome to the April edition of the West Craven newsletter.

This month we offer a guide to professional indemnity insurance for SMEs, we look at why insurance premium tax is set to rise, we ask whether the cost of insurance should be capped for young drivers and we look at how making improvements to your home could invalidate your insurance.

Until next time,

West Craven Insurance

A Guide to Professional Indemnity Insurance for SMEs

The Small Medium Enterprise (SME) has become a sector in its own right. Over the last eight years the amount of people choosing to become their own boss or choosing to go freelance has jumped from 1.4 million to 1.9 million.

It’s easy to see why an SME might be appealing. The chance for a more fulfilling work/life balance, to explore careers that better suite your particular set of skills and to ability to escape from the traditional 9-5 way of doing things.

That’s not to say it’s all 12pm-3pm work days with Mondays off. You’ll need to learn the admin of the business, how to process your own taxes and National Insurance. As your business grows from small to medium, you’ll have to learn how to manage and employ staff. As your business grows, so will your client base and team of employees. How can you insure you’re protected should the worst happen? Professional Indemnity Insurance could hold the answers.

What is professional indemnity insurance?
Professional Indemnity Insurance is a product that is designed to protect you or your business against the things that might go wrong whilst you are providing your professional service. For example, a professional indemnity insurance policy can cover mistakes that created a financial expense for you or your client, negligence on your part or breaches of professional duty. Essentially, professional indemnity insurance protects you against human error, something that can’t always be accounted for. You can look at a professional indemnity insurance policy in much the same way as your home insurance policy. You have it for peace of mind, in the hope that you never need it, but if you ever do, it will ensure that your business can continue trading.

What types of businesses need professional indemnity insurance?
We currently live in a culture of blame, with people constantly looking for someone to point the finger at should things go wrong. Whilst in the past, professional indemnity insurance was protection for individuals or companies who provide services and advice upon which their clients depend (for example architects or accountants). Now, however, it’s important that all businesses are protected against mistakes.

Looking for the right professional indemnity insurance? West Craven can assist you in finding the best possible cover for your business at the best price. Get in contact today on 01282 817 277.

Insurance Premium Tax Set to Rise in June

 Insurance Premium Tax (IPT) is set to rise from 10% to 12% in June. This is following a 2% increase last October.

The tax is added to over 50 million general insurance policies each year, including those for cars, homes and private medical cover.

Announcing the extra 2% increase, the chancellor, Philip Hammond, said IPT rates in the UK remained some of the lowest in Europe and that money was needed to pay for the government’s infrastructure plans.

From the 1st of June, those looking to buy insurance will see the higher 12% rate added to their premium.

Since IPT was introduced in 1994, successive chancellors have steadily increased the amount charged. IPT has recently been raised three times in the space of 18 months.

Car drivers appear to be most likely to feel the worst of the tax hike. The increase will add &10 to the average car insurance premium, according to the AA.

The AA said the chancellor had created the illusion of being the motorists’ friend with a freeze on fuel duty, while “pickpocketing drivers” on IPT. Its president, Edmund King, predicted that the extra levy would only add to the 1m uninsured cars on UK roads.

“In 18 months, tax on insurance will have doubled - no other tax has increased by that much,” he said.

IPT was introduced in 1994 to raise revenue from the insurance sector, an area that was viewed as being under-taxed.

Those who oppose the tax, say it is regressive because it is applied to individual policies. This means people who have higher insurance costs, pay a disproportionately high rate of tax.

The AA claims that those paying the highest premiums - Residents of London and Young Drivers - will receive the highest IPT.

If you require any more information on IPT, or you are looking for an affordable insurance policy, get in touch with West Craven.

Should the Cost of Insurance Be Capped for Young Drivers?

MPs recently debated whether the cost of insurance for young people between the ages of 18 and 25 should be capped at &1,200 a year, following an online petition that was signed by 185,000 people.

So-called e-petitions are hosted on the parliament website, and require 100,000 signatures to be considered for debate.

The debate comes shortly after a rise in car insurance premiums, as a result of a government decision to change the injury compensation rules. Insurance providers will now need to pay out more to the victims of an accident, which in turn means they are expected to increase premiums.

 

Rhys Parker the 19 year-old who started the e-petition, said it was becoming harder and harder for people aged 18-25 years of age to start driving.

MPs were informed that the average premium for a 17 to 20 year old driver is &3,878 a year.

Debates brought to parliament by E-petitions are for discussion only, meaning MPs do not have the power to introduce a limit on premiums.

The debate will be opened by Steve Double, the Conservative MP for St Austell and Newquay.

"I don't support the cap, but I do think we should be doing more to help young people," he said.

"The reason premiums are high is that young people have far more accidents."

However, in response to the issues raised by the petition, the government have advised that reforms to whiplash rules will result in lower premiums.

It also advised that usage of black boxes, which monitor and reward good driving habits, can bring the price of your insurance down for safer drivers.

Are you a young driver looking for the perfect insurance policy? West Craven can help! Get in touch with an expert member of our team today!

Improving Your Home Could Invalidate Your Insurance

If you're a homeowner then you’ve probably considered making some changes at one point or another, whether this be renovating or extending, we’ve all thought about the improvements we could make to our own home.

While extending and improving your property can add considerable value to your home, it is vital that you speak with your insurer and eliminate the risk of being under insured.

With all of the costs associated with moving into a new house, plenty of homeowners are now opting to enhance their own home instead of searching for a new property. In a recent study from Co-op insurance, it was found that approximately 75% of homeowners have made changes to their property since moving in.

If you’ve recently had or you are currently planning on having major building work done, such as adding a conservatory, converting the loft or adding an extra bedroom, you must receive planning permission and all work must be carried out following the correct regulations in order to avoid invalidating the cover on your home.

It is also worth remembering that even if the work carried out on your home is completed to the correct standards, you will still need to notify your insurer of these changes. When the original cost of your premium was calculated, this figure was based on the value of your home at that time and the potential rebuilding cost. If the value of your home were to rise due to improvements, you could be under insured and your cover may become null and void.

This also applies to any new constructions outside of your home such as garages and sheds, as your building insurance should cover both your home and outbuildings.

If you plan to work on your home, you should contact your insurer before any work begins, provide them with as much information as possible and be sure to ask if you need to make any changes or increase your cover for the duration of build.

Don’t forget to double check your contents insurance at the same time, as your possessions may not be covered if they were damaged during the construction process and for the extra peace of mind, look into legal cover to help with any potential disputes with the tradesman over poor workmanship.

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