With this commercial insurance the only compulsory section is normally Property Damage which will provide cover on the buildings, if required, & contents therein.
The level of cover ranges from the most basic ‘Fire Only’ to full ‘All Risks’. The optional sections include:
- Business Interruption (loss of profits)
- Business Money (including Personal Accident Assault)
- Employers’ Public & Products Liability
- Trade All Risks (cover on property taken outside the premises such as lap-tops)
- Goods in Transit.
Many policies also offer other covers such as Engineering Inspection, Cyber Liability, Directors & Officers Liability & Commercial Legal Expenses.
The premiums for the various sections are normally calculated separately, unless you have a ‘package policy’, with a rate being applied to the relevant risk factor. This will be the Contents and/or Buildings sum insured for Property Damage, the Estimated Gross Profit for Business Interruption, Estimated Wage-roll for Employers’ Liability & Estimated Turnover for Public/Products Liability etc. The rates applicable will depend upon a variety of factors. For property insurance it’s mainly the location & construction of the property. With concerns about the effects of climate change in recent years many insurers have invested in flood-mapping to help determine the probability of a flood event occurring in a certain postcode location. This has meant that many properties close to watercourses or in known flood areas may either struggle to obtain Flood cover or have a very large excess applied, often in the tens of thousands of pounds. The tragic events at Grenfell Tower has resulted in insurers looking very carefully at the use of some modern building materials with composite panels causing particular concern. These are often used to clad the walls of industrial units & also in the roof as they have excellent insulation properties compared with corrugated or profile steel or asbestos sheeting previously used. The material used in these sandwich panels is a big factor in determining whether or not an insurer will provide terms & if so, at what rate. The highest risk is Polystyrene (known as EPS or XPS) & Polyurethane (PUR), both of which are classed as ‘non-approved’ by the Loss Prevention Certification Board. These panels are no longer manufactured but may still be found on properties built during the 1970’s & 1980’s. ‘Approved’ core materials include Polyisocyanurate (PIR), Phenolic Foam (MPHEN) & Mineral Wool such as Rockwool. It is vital that the core material is identified & notified to insurers as failure to do so may render the insurance null & void. The activities that take place inside the building also have a big effect upon the premium charged. Any use of heat-producing equipment such as welding gear or angle grinders will obviously increase the fire rate as will the presence of any gas or diesel-powered portable heaters. Large amounts of combustible materials such as paper/cardboard & plastics will also have a bearing.
The Theft rate will depend on how theft-attractive the contents are, either the goods being manufactured or the machines that make the products, and the level of security. Most insurers will specify a minimum level of security which normally includes 5-lever mortice deadlocks on the final exit doors, good quality padlocks on roller-shutters & key-operated locks or substantial bars or grilles on accessible opening windows. They may also require the installation of an intruder alarm or CCTV.
The premium for the Employers’ Liability section is determined by the activities undertaken. Non-manual activities such as clerical/admin or sales roles will attract a much lower rate than manual roles such as engineers, warehouse men & drivers. Furthermore the type of manual work will be relevant with jobs involving the use of machinery or heavy lifting attracting a much higher rate. Any work away from the premises, other than collection or delivery, is also considered to be an increased risk the Employers’ Liability.
With Public & Products Liability insurance the premium is normally determined by the type or products made or sold so, for instance, a company that sells brake pads for cars will pay more than a wholesale florist. The destination of the goods is also an important factor with exports to North America attracting a significantly higher premium. For leisure centres, children’s activity centres and the like the activities undertaken & the numbers & types of people attending are relevant to insurers.