Buying insurance at a distance, as many small businesses do these days, means you may not always get the advice and guidance you need to ensure your Marine Trades Insurance programme truly meets your demands and needs. Even when you enjoy the benefits of a face-to-face consultation some of the important terms and conditions of your protection could be lost amongst vast quantities of paper or pdf that comprise the minutiae of policy wordings, endorsements and schedules. Looking at three of the common policy wordings available to marine traders reveals documents ranging from 72 pages to 116. Add to this a swathe of additional pages of schedules and warranties, it’s not surprising that some traders are unaware of certain terms imposed on them by their insurers that could invalidate their cover if breached. Here are 6 tips to help you ensure you do not inadvertently invalidate your Marine Trades Insurance:
Tip #1: Find out what your policy warranties are. A policy warranty is something that you must do in order to maintain your cover. Breaching a policy warranty on a commercial insurance policy means your insurer can avoid paying a claim even if the warranty breach does not relate to the claim. Typical warranties on a Marine Trader’s policy include limits relating to height work, work on or handling of vessels of a particular type or above a certain length or value. They could also impose conditions relating to heat work or clearing trade waste or storing flammable liquids. One policy wording we looked at included no less than 50 individual warranties.
You will often find the warranties listed on your schedule but sometimes you will only find the number or title of the warranty, not the full explanation of what you are required to do. You may need to refer to your policy wording, which your provider should have sent you, to determine the scope of the warranty.
Tip #2: Find out what your policy conditions are. Where one policy has a warranty for something another will have a condition. The effect of breaching a condition can have the same effect of a warranty breach – in the event of a claim you could find yourself with no cover. So where one insurer may impose a warranty that states all doors and windows must be secured by a particular type of lock and simply indicate on your schedule that a security warranty applies, another will show no warranty but may have a condition within the main policy document that states the minimum security requirements of your premises.
Tip #3: Ensure you fill in your proposal form correctly. We’ve never met anyone who enjoys filling in forms and the first piece of bad news here is that some of the proposal forms for Marine Trades Insurance are huge – 32 pages for one insurer. Your satisfactory completion of a proposal form may be a condition or warranty of your cover and will also provide the basis of the insurance. This means it is essential that it is completed accurately. For example, your insured activities will be as you have indicated on your proposal so if you have stated that you are a marina operator but omitted to mention that you also offer occasional canoe hire then you will have a problem if a claim arises from the undisclosed activity. Make sure all values and estimates are as accurate as possible and disclose all information requested, including claims.
At the end of the proposal form there will probably be a declaration for you to sign which states that you have answered all questions accurately and truthfully and not withheld any material facts. A material fact is any fact which a prudent insurer would deem material to the underwriting of your insurance. In the real world such judgement is likely only to be exercised in the event of a claim so the onus is on you to ensure you have fully disclosed anything you think may be relevant to your insurers.
Tip #4: Read your Statement of Fact carefully. If you don’t have to complete a proposal form your insurer may issue a Statement of Fact. This document outlines the basis on which your insurer has provided your cover and will have been constructed using information you have disclosed to your insurance provider. There may be instances where assumptions have been made or estimates provided in the initial quotation process that need to be rectified. It is essential that any inaccuracies are addressed as, in the paragraphs above, your insurance could be invalidated and this will more than likely occur when a claim is being made. Typical errors occur where there are Yes/No questions on the statement such as “Do you work away from your premises?” or “Do you work with heat?” If you haven’t been asked a specific question such as “Are there any CCJs against you” and somebody has assumed incorrectly that the answer is “No”, it’s up to you to notify your provider that this information is incorrect.
Tip #5: Keep your insurance provider up to date. The previous 4 tips are concerned with getting the basis of your insurance correct from the start of the period of insurance. As your insurance year develops you may have opportunities to develop your business beyond the original agreed scope of cover. For example, if you have told your insurers that you restrict work to vessels under 60ft or, say, £250,000 in value, but are offered a contract to work on a vessel in excess of these limits you must inform your insurer. Similarly if you begin undertaking activities that are not listed in the business description on your insurance schedule, start taking on employees or sub-contractors or if your turnover or wage levels are going to be considerably higher than your original estimate you must discloses this information to your insurers to ensure your cover remains valid. This list is by no means exclusive so, if in doubt, get in touch with your provider.
Tip #6 : Get a free Marine Trades Insurance Health Check from IRCM. Telephone us on 01902 796 793 or email firstname.lastname@example.org . We will look at your policy wording, endorsements, warranties and statement of fact (where applicable), review your schedule of cover with you and highlight any gaps or inconsistencies in your cover.