October Newsletter - Employer's liability insurance: what you need to know

In this month's edition, we start off with a report that has found specific car dealerships have been wildly overcharging for insurance cover.

We also detail Employer's Liability insurance, we take a look at how Brexit has affected the British insurance industry and finally, with the collapse of Thomas Cook, we answer a few questions regarding cancelled trips and travel insurance. 

Car dealerships found to be overcharging for insurance cover

 

New findings reported by consumer body Which have revealed that car dealerships are overcharging motorists by up to 278% more than insurers when it comes to the price of add-on products.

Additional covers such as scratch cover, tyre damage or gap insurance are being sold at an exorbitantly high rate by dealers when selling a new car due to the substantial commission rates that come with them.

Four car dealerships were examined selling Ford, Lexus, Toyota and Honda vehicles, with premiums compared with independent online insurers. Alarmingly, gap insurance was being sold for up to £367 above the price that independent insurers were offering, with the majority of that cost going straight to the dealership as opposed to covering any of the insurance cover itself.

Which? also discovered that cosmetic and dent insurance was almost 60% cheaper to purchase directly, with wheel and tyre insurance up to 26% cheaper.

“We’re really concerned that car dealers are continuing to pocket huge commission fees from selling insurance products at rip-off prices, despite recent scrutiny from the financial regulator,” noted Which’s money editor Jenny Ross.

“The FCA needs to keep a close eye on these practices and be ready to step in with strong action if consumers face mis-selling or unreasonable charges for these products.”

This clearly calls into question the legitimacy of purchasing insurance cover directly from dealerships when purchasing a new car, and we would advise anyone in a similar position to contact us directly to talk about insuring your vehicle to avoid being unnecessarily overcharged.

 

Employer's liability insurance - what you need to know

 

When it comes to ensuring the safety and longevity of your business and its employees, it can start to feel like there exists a never-ending supply of insurance products that are required to keep your company protected should the worst happen; public liability, directors and cyber, to name a few.

Whilst those aforementioned policies might not be necessary for your business depending on the size of your operation, employee liability is a rarity in that it is essential for your company as soon as you employ one or more people. Here, we break down why employee liability insurance is far from optional for your business:

Do I really need employee liability insurance?
If you employ one or more other people, yes! This insurance is compulsory by law and can carry hefty fines by the government should your company not have it in place. This can include a £1000 penalty if you cannot produce the certificate on request or display it in your place of work and a potentially crippling £2,500 fine for every day that you do not have the insurance in place.
Just in case that wasn’t enough, it’s worth pointing out that these penalties can be backdated to periods where such protection wasn’t in place. With that in mind, it certainly isn’t worth running the risk of not having employee liability for your business.

Who and what does employee liability cover?
The policy protects every employee that has their hours or location chosen for by your business, regardless of whether they are paid or not. This can cover permanent, contract, part-time, temporary, volunteer or student workers.

In terms of the protection provided, employee liability will offer assistance with paying compensation to employees who suffer an injury or illness as a direct consequence of any activity that your business carries out; for example, a fall from a faulty ladder. The protection would also be in place should a former employee make a claim against you.

Are there any exceptions?
Family businesses are exempt from requiring employee liability, so should you run a shop or restaurant, you would not need such a policy in place and would not be at risk of a fine.

How much cover could I need and how is it calculated?
Small-to-medium businesses must have a minimum of £5m cover as a legal requirement, with most providers offering cover of at least £10m.

The policy is determined by looking at the industry that your business is in and how great the risks are to your employees; the size of your business, i.e. how many people are in your employ and the history of your company. This could look at the amount of time that you’ve been trading for and any past claims.

The effects of Brexit - billions lost in British insurance industry

 

Whilst the intricacies surrounding Brexit are constantly shifting due to the more-than unsteady nature of Britain’s current political climate, the effects of the United Kingdom’s potential exit from the European Union are certainly being felt in the nation’s capital, according to a new report.

Business Day are suggesting that as much as £61 billion is being moved to financial centres within Europe irrespective of the terms of the UK’s exit as a direct result of the landmark referendum in 2016.

This is down to the EU insurance and pensions regulator ordering each UK-based underwriter to move policies held by clients based in Europe onto the continent, leaving around £5 billion in Britain should Brexit occur as scheduled on October 31st. This is according to the Bank of England’s July financial stability report.

“There’s a tension, because a lot of the expertise in writing that business still resides in London,” offered Clifford Chance partner Hilary Evenett. “Over the years, you can also anticipate that other countries are going to develop that expertise locally. In the future, it’s not certain how much expertise will be here and how much will be on the continent.”

There’s an increased need for brokers to finalise their plans, with express permission from authorities in 27 EU countries required in order to continue to serve European businesses. Failure to do so would mean that insurers would be unable to legally pay out in the event of a claim.

Whilst opposing MPs are doing their best to rule a No Deal Brexit unlawful, the potential for a disorderly exit in October remains very real, with the industry still bracing itself for the full impact alongside ramifications that could affect brokers over the next few years.

Thomas Cook's collapse - what about my flights and insurance?

 

The collapse of Thomas Cook has plunged British holidaymakers both abroad and at home in uncertainty, with the travel group going into compulsory liquidation on 23rd September. Whilst the Government and Civil Aviation Authority (CAA) have stepped in to offer their assistance, with 150,000 travellers needing to be flown back to the country, there remains plenty of questions to answer for those who were preparing to leave the United Kingdom over the coming months.

We’ve provided a few typical scenarios below to assist anyone directly affected by the recent news.

My holiday is booked for later this year. Can I get my money back?
Yes. The CAA have confirmed that those with holidays booked through Thomas Cook can apply for a refund from September 30 through a new service.

What about refunds for travel if I made my own arrangements?
There are several avenues open if you booked just your flights with Thomas Cook and are wondering how to receive a refund. If your flights were ATOL protected then you will be able to claim the costs back.

But even if you haven’t, you can contact your credit card provider (or bank, if you paid via debit card) and obtain a chargeback form, which will allow you to recoup the costs of your flights.

What about my travel insurance?
These are exceptional circumstances; most travel insurance policies don’t provide cover in the event of an airline, travel agent or tour operator going bust, so it’s vital that you check your policy documentation to confirm if your cover includes either Scheduled Airline Failure or End Supplier Failure.

Should you have this in place, then you should not have any issue recoup the cost of your air fare. If not, it’s important that you confirm with your insurer any other processes in place to protect against travel provider collapse.

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