Is vandalism insurance suitable for your business?

Welcome to our first newsletter of 2019! In this January edition, we look at why vandalism insurance has become such an important policy for businesses. 

There's also news on the ABI's response to Europe's no-deal contingency plans, the industry's response to the Gatwick Aiport drone chaos over Christmas and finally, we analyse why 2018 provoked a record level of subsidence claims across the country. 

Is vandalism insurance suitable for your business?

 

Vandalism insurance is a sad result of the times we live in. Slowly, the policy has gone from a bolt-on policy to an absolute essential. Vandalism can have a huge financial effect on your business, so it’s important to have protection.

You won’t usually find a single vandalism policy, however, you can build the policy from multiple options to cover repair and replacement costs and minimise lost income. It’s a case of choosing the covers that are right for you.

Every insurer will have a different definition of the type of insurance you need (if they even offer it). Generally, it’s treated as malicious or willful damage to or destruction of someone else’s property. Nearly all the insurers will likely stipulate that the damage must be reported to the police immediately before they will even consider paying any money. There will likely also be a need for supporting evidence. A vandalism policy will usually pay out to cover repairs or replacements of contents. You can usually combine this policy with a business contents insurance policy.

Ensure you read the policy documents as carefully as possible to make sure you’ve definitely got the level of cover you’re looking for. Some buildings and contents insurance might cover vandalism, but every insurer is different, so make sure you do your research.
Why is it so important?

Businesses are at risk of vandalism at all times, from random acts like graffiti or damaged exteriors to targeted attacks. If you own the building, having a policy to assist with the costs of repairs are vital.

If you do not own the property, it is likely that your landlord will have the correct policies; however, it’s always a good idea to double check. It’s also worth noting that any additions you make to the property (for example air conditioning) will not be covered by the landlord’s policy, meaning you might need a tenant’s improvement policy, which will assist with the repair and replacement cost.

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Even with the landlord’s insurance covering the costs, it’s possible you might be asked to leave the property whilst it receives repairs. If this is the case, you could lose thousands in lost revenue. A business interruption policy can assist you with the money you lose due to having to leave your premises.

Association of British Insurers blasts European no-deal plans

 

The Association of British Insurers has criticised the approach of the European Union’s no-deal contingency plan in the event that the United Kingdom exits the continent without a deal later this year.

Given the wide-ranging consequences of the no-deal scenario, many of the country’s industries have been pushing for further clarity on the potential ramifications should Britain leave Europe without any agreements in place.

The European Commission had this to say when questioned on the subject: “After a thorough examination of the risks linked to a ‘no-deal’ scenario in the financial sector, the Commission has found that only a limited number of contingency measures is necessary to safeguard financial stability in the EU27.”

This approach has not been welcomed by the ABI, however, as it contrasts with a HM Treasury announcement in 2017; in the event of no deal, EU firms would be able to continue providing insurance contracts to UK customers on a temporary basis.

“So the European Commission says that derivatives contracts can be carried over if there is a no-deal Brexit, but has not lifted a finger to allow insurance contracts to be fulfilled,” offered the ABI’s regulations director, Hugh Savill.

“While the action on derivatives is welcome it is extraordinary that the EU authorities will act to help major financial institutions but not millions of ordinary people living in Europe whose insurance and pension contracts happen to be held in the UK.”

The problem all stems from the many insurance and pension contracts written before the Brexit vote in 2016 that will continue after the exit from the European Union in March of this year. This includes UK companies paying pensions to EU citizens and business insurance contracts sold to EU companies from a UK-based broker. Leaving the single market means that insurers will forfeit their automatic licence and be unable to insure in their customer’s area and will thus be unable to pay due to legal restrictions until an alternative agreement is in place.

Insurance industry comments on Gatwick Airport drone chaos

 

The travel disruption surrounding Gatwick Airport turned into one of the biggest and subsequently farcical stories of the Christmas period. Whilst local authorities have been unable to make sizable progress with arresting any drone pilots or those responsible for the chaos, what is clear is that the industry will be required to act due to the sheer number of cancelled flights.

Travel disruption on this level hasn’t been seen since the infamous volcanic ash cloud from Iceland in 2010, with over 1000 of Gatwick’s flights cancelled and 140,000 passengers affected in the week before Christmas.

Whilst rejecting the notion that this could be a terrorist attack, Transport secretary Chris Grayling offered the following on the subject last month: “It goes beyond what the airlines are responsible for. This should be covered under travel insurance policies. This is certainly not linked to terrorism in the conventional sense. This is something I would hope the insurance industry would take an enlightened view about.”

The Association of British Insurers has responded with Mark Shepherd, head of General Insurance policy releasing the following statement: “Where customers have bought travel insurance which includes cover for disruption they will be able to claim in the usual way. This cover typically refunds the cost of things like missed accommodation or car hire overseas. The first point of contact for anyone caught up in the Gatwick incident should be the airlines, who have a duty of care to look after their customers and help them make alternative arrangements regardless of the exceptional circumstances.”

Under European Regulations, airlines are not obligated to compensate passengers in the event of a delay, or in this case, severe disruption or flight cancellation. They do, however, have a duty of care to their customers and are expected to provide refunds for cancelled flights.

For those who purchased travel disruption cover who expected to travel over the Christmas period, they will have the appropriate protection, subject to their stated policy limits. Those without are strongly advised to contact the airline that they booked flights with in order to organise compensation or refunds.

2018 heatwave provoked record levels of subsidence claims

 

The Association of British Insurers has revealed that households across the country made over 10,000 subsidence claims in the summer of 2018 due to damage to their homes, the highest since the heatwaves of 2003 and 2006.

These claims were made for a myriad of things affected by the dry weather, with windows, walls and cracked doors among those affected and compensation claims close to quadrupling on their levels in the third quarter of the year in comparison with 2017.

The jump in claims was stark, with a rise from 2,500 in the second quarter of the year to 10,000 and an increase in the value of &14m to &16m. It represents the highest quarter-on-quarter jump since records started in 1992 and saw the South East of England most affected by the scorching temperatures.

“Thousands of people across the UK are now suffering because we experienced such an unprecedented period of dryness this summer. Insurers understand that this is a stressful time for affected homeowners and are providing widespread support to help with repairs.

“Our advice is don’t panic if you spot a crack in your home – there are many other reasons why these may have occurred. Get in touch with your insurer if you believe your home is experiencing subsidence and they’ll be on hand with the best expertise and the best technology. Insurers and their appointed loss adjusters are very well equipped to deal with these types of complex claim.”

The weather wrought havoc on British homes in 2018, with last year’s brutal winter causing record levels of burst pipes during February and March.

From the map below, Wales and Scotland were the least affected areas of the UK during the summer heatwave, with almost every part of England suffering to an extent:

 

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