Insurance

A quick guide to commercial combined insurance

Allison S Robinson | 29 October 2021 | 2 years ago

A quick guide to commercial combined insurance

Every month business owners, and homeowners, begrudgingly pay their insurance and ponder whether they are wasting their money. If you ask any of them after an insurable event has occurred whether it was worth it, it is usually a resounding yes.

Nothing is guaranteed in life, except change. When the unexpected hits, insurance will be the difference between a business disaster and a saved business. It is vital to have the right cover in place. A commercial combined insurance policy might be the answer for you. Here is a simple guide.

Running the insurance gauntlet

It can be an admin headache trying to ascertain which policy to have in place, which one needs updating, which one is expiring and which one is left out.

A commercial combined policy might suit your business needs and provide essential cover for your business. Some businesses that involve military kits, weapons, fuel and other specialist industries might need additional cover.

A commercial combined insurance policy is very suitable for your businesses if it takes part in a lot of manual work. Examples of this would be:

  • Manufacturers
  • Repairers
  • Engineering companies
  • Distributors
  • Wholesalers
  • Printers
It would be prudent to use an experienced insurance broker that has a wealth of knowledge with businesses of your type. They will have access to top insurers and underwriters that understand your business risk. They will shop around on your behalf to get the best cover for the best rate.

What is commercial combined insurance?

A commercial combined insurance policy is a risk management vehicle used to provide insurance cover for a combination of insurable liabilities. Such policies bundle together your complete, comprehensive business cover in one single policy, thereby bringing together a range of common covers and non-common. This averages out the degree of risk and is more attractive for an underwriters risk appetite.

Your business will have a number of low risks (in the eyes of the underwriter) as well as areas of high risk. Your insurance broker will advise you on the selection of cover and risk mitigation alternatives to protect your business.

What businesses does it suit?

The commercial combined insurance route is a good match for smaller businesses, wholesalers, engineers and manufacturers. It offers comprehensive financial protection for your business and gives the business owner much needed peace of mind and income security.

All sorts of unforeseen circumstances can damage your business, and the commercial combined insurance route aims to create a wide net of security through a simplified administrative process.

When calculating the cost of the cover, your broker will assess factors such as these:

  • Business size
  • Business location
  • Number of employees
  • Business turnover
  • Industry sector
  • Market reach
  • Activities
  • Processes
  • Machinery
  • And more

Features of commercial combined insurance

The biggest advantage is that it is flexible and customisable, which is a vital factor for SMMEs. Each policy will be tailored to your company’s unique needs.

With the policy being tailored to your unique range of work requirements, you mostly don’t need extra liability, accessible and comprehensive policy additions.

The main reason why commercial combined policies have become so hugely popular with business owners is due to their flexibility. The cover can include essentials like:

  • Employers’ liability cover
  • Professional indemnity
  • Public liability
  • Stock cover
  • Business interruption cover
Once you have worked through all your cover requirements, which should not be rushed, your broker can probably strike a deal with the insurers, and their underwriters, within one business day.

There are a large number of covers available through a policy, including but not limited to:

  • Public liability insurance
This will cover any legal costs from claims that the public files against you.

  • Warehouse insurance
This will provide cover for the theft of or damage to any warehoused stock.

  • Employers liability insurance
You are obliged to purchase this risk cover if you have any full time, part-time or temporary employees.

  • Product liability insurance
This insures against any loss or damage caused by your product, including illness. This includes products not manufactured by your company directly but branded for your company.

  • Material damage insurance (formerly known as Fire and Perils Insurance)
This can cover fire damage to, and theft of or from buildings, business equipment, machinery, stock, and goods in transit. It can also cover business interruption, but there may be exclusions so read the fine print. The fire cover aspect usually covers electrical fire and arson but verify if wildfires are included.

  • Stock cover
This addresses accidental loss or damage, decay or spoiling of stock, floods due to burst pipes, explosions, acts of nature (verify the parameters), or even malicious damage.

  • Other cover options include:
  • Book debts
  • Money
  • Specified Items ‘All Risks’
Business interruption cover is often excluded from policies so verify if you are insured for loss of income due to a forced closure, temporarily or permanently.

Verify if you are covered for goods in transit, money, glass and loss of licence. See our exclusions commentary below as glass damage due to supersonic events can be excluded.

Why should you choose a commercial combined policy?

Here is a summary of the benefits that we feel a business owner will get from choosing the combined insurance route?

Benefit 1: Peace of mind

This has to be the leading benefit. By combining your diverse risks together in one policy, you can be confident that your business is covered on all fronts, literally. It will, however, only be as effective as you have been in the clear outlining of your business risk to your insurer.

In addition, it’s just one call by having all the risks in one combination with one broker when you need to amend or adjust aspects of the policy.

Commercial combined insurance is suitable if your business type is:

  • Manufacturing
  • Wholesale supplies
  • Warehousing storage
  • Installation services
  • Professional services
  • Contractor services
  • Repairs
  • Importing
  • Exporting
  • Distribution
  • Retail
  • Printing
  • Metalwork production
  • Precision engineers
  • And many more

Benefit 2: Customised risk management

By using the combination of policies, your business benefits from a fully customised risk cover solution. Your neighbour’s businesses could be far more complex than yours, so why purchase a cover like theirs? Smaller businesses run the risk of leaving threats under-protected if not using commercial combined insurance. On the other hand, larger businesses can quickly escalate costs through having many different policies. Both of these instances cause a waste of money.

Benefit 3: Simplicity

Simplicity is the aim of every business owner because it breeds productivity. Now you can make your insurance simple as well and save significant amounts of admin time.

You no longer have to deal with 10 different companies and a dozen different policies. You deal with one broker, one insurance company and one policy – less time, less hassle and greater ease.

One of the top benefits of commercial combined insurance is the ease of use for the client – one policy to manage rather than several different policies, all with their own renewal dates. There is a wide range of insurance policies available, and the careful selection and combination of them creates the ideal package of insurance for your business.

Benefit 4: Cost saving

Another benefit to business owners is the cost savings. It works out cheaper to collate your insurance risks under one cover as it spreads the risk and creates a lower average risk. The underwriter’s risk is, therefore, lower, and you are awarded a lower insurance rate. The cost impact is brought about by the bulk aspect. A combined policy cost will, in the majority, be more affordable than individual policies.

Check the fine print

Once you have been presented with the insurance brokers proposal for your business risks, there is a vital step that you have to take:

If you need to, ask a hundred questions because what is written and what is understood in a policy are often not the same. In addition, ask your questions in writing and get answers in writing. Here is an example of when you would need to raise a question with your insurer.

This is an actual example extracted from a commercial combined insurance policy issued by a large UK insurance company. Their cover states:

The Cover 

In the event of the Property Insured (as described in the Schedule to this Section) or any part of it being Damaged as a result of any of the causes described in the Operative Cover during the Period of Insurance, we will pay you the value of the Property at the time of the Damage (if it is totally destroyed) or the amount of the Damage or at Our option reinstate or replace the Property or any part of it.

Cover A

The following Perils as defined:

1 Fire.

2 Lightning.

3 Explosion of Boilers.

4 Explosion.

5 Aircraft.

6 Riot, Civil Commotion, Strikers, Locked-Out Workers, or persons taking part in labour disturbances or malicious persons.

7 Earthquake.

8 Subterranean Fire.

9 Spontaneous Fermentation, Heating or Combustion of the Property resulting in Fire.

Cover B

The following Perils as defined (subject to the Exclusions):

10 Malicious Persons not acting on behalf of or in connection with any political organisation excluding Damage by theft.

11 Breakage or Collapse of radio and television aerials, aerial fittings and masts.

12 Escape of Oil from any fixed oil-fired heating installation.

13 Impact by any road vehicle or animal.

Cover C

The following Perils as defined (subject to the Exclusions):

14 Storm and Flood.

15 Bursting or Overflowing of Water Tanks, Apparatus or Pipes

16 Water Accidentally Discharged or leaking from any automatic sprinkler installation(s).

  1. Subsidence, Ground Heave or Landslip
Cover C is subject to the following Special Conditions: 

And the special conditions are stated. The cover goes on for a bit and states, for example, the exclusion of computer equipment but the inclusion of professional fees. That is important for you to know as without computers most companies cannot operate.

The cover, in the original document, does seem quite comprehensive indeed. If, however, you skip to the exclusions of the policy, you will see the following stated:

EXCLUSIONS

(No. 1 omitted for brevity reasons)

2 Damage occasioned by pressure waves caused by aircraft or other aerial devices travelling at sonic or supersonic speeds, or any legal costs or expenses arising therefrom or relating thereto.

3 Damage, cost or expense of whatsoever nature directly or indirectly caused by, resulting from or in connection with any act of Terrorism regardless of any other cause or event contributing concurrently or in any other sequence to the loss.

For the purpose of this exclusion an act of Terrorism means an act, including but not limited to the use of force or violence and/or the threat thereof, of any person or group(s) of persons, whether acting alone or on behalf of or in connection with any organisation(s) or government(s), committed for political, religious, ideological or similar purposes including the intention to influence any government and/or to put the public, or any section of the public, in fear.

This exclusion also excludes Damage, cost or expense of whatsoever nature directly or indirectly caused by, resulting from or in connection with any action taken in controlling, preventing, suppressing or in any way relating to any act of Terrorism.

Damage to your property and staff will also be excluded from a supersonic jet event. Is your building clad in glass? Not only is property damage excluded, but the policy excludes, further down the page, loss of income, work interruption and legal liability. Plug that hole.

Damage from a riot and the prevention or suppression of a riot is another example of what will be excluded. Small businesses in South Africa were caught by surprise in 2021 when region-wide rioting hit Kwa-Zulu Natal. SMMEs thought they were covered by the commercial combined insurance but hadn’t read their exclusions. The region-wide loss was GBP 1,228,626,550 with 45,000 businesses being affected – eighty-nine percent were SMMEs.

The majority were forced into bankruptcy or are operating at a fraction of their pre-riot turnover because they can’t come back fully from the damage. A critical misunderstanding by the business owners.

Not only do these examples highlight the need to understand your insurance policy fully, but it also highlights the need to work with an experienced professional. That professional must be prepared to work through each point with you and confirm explanations in writing.

Conclusion

By strategically managing your risk contingency vehicles combined with actively reducing your business risks, you will lower your premiums. Your insurance broker should advise you of safety measures that your business can take. By proactively executing these safety measures, you will not only reduce the cost of insurance but will also reduce the chance of claiming and will strengthen the validity of any claims made. Choose advisers that will help you mitigate risk and negotiate discounts, and not purely sell you cover.

Topic

Insurance

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