Business Continuity Planning
All businesses, regardless of size, should prepare or review their Business Continuity Plan (BCP) during this time. Ensuring staff understand self-isolation processes, how to work from home and where to find company information is paramount to keeping your business continuing to run efficiently during this time.
Steadfast Group has created a BCP Toolkit you can use to implement in your business. You can download our BCP Toolkit here.
Commercial Motor – Vehicle Lay-downs
What if your client is proposing to take a number of their vehicles “off the road” during the current COVID-19 situation as they are not required. The client is looking to reduce their costs. What are the options?
1. Third Party Property Damage only
Not a preferred choice as it will not provide cover for the clients’ vehicles.
2. Static Risk Cover
This is an option that will provide cover to the client for their vehicles, but there is no road risk cover. As the name implies, it covers the vehicles at a specific location only for specified perils or alternatively all risks cover.
There are a couple of items to discuss with the client:
- There is no cover should the vehicles be driven off the premises.
- What if the client moves the vehicles whilst on the premises and damages the vehicle? If on a static policy, is this impact?
- If you move them off a Motor policy, and they remain registered vehicles, there may be no liability coverage.
What actions are required by you to protect your clients’ interests?
Firstly, talk to your client about:
- Where are the vehicles to be located?
- What are the risk management steps taken by the client for the protection of the assets whilst laid up, such as security, batteries disconnected, etc
- advise the client of the changes in cover.
Secondly, talk to the insurer(s) about the cover negotiate appropriate cover for the client, including an acceptable return premium on the vehicles no longer on the road.
Finally document your discussions with the client and the insurer(s) and confirm the instructions in writing to all concerned parties.
Contract Works – Cessation Exclusions
Most Contract Works policies have a Cessation of Works Exclusion. For example, in the CGU Steadfast Annual Construction Policy, the words read as follows:
“17. Damage arising from any abandonment of the Project or cessation of work for more than 30 days.”
Under the CGU Steadfast Single Project Construction Policy, it has the same Exclusion.
Q. What actions are required by you to protect your clients’ interests?
Firstly, talk to your construction client about:
- are any projects that will or may exceed 30 days.
- what is the reason for closing down the project – Government directive, Principal instruction, etc.
- advise the client of the Exclusion in the Policy.
- if they are closed or closing a project, what risk management steps are they taking to protect the site, such as security patrols, alarms, removal of tools and equipment, etc.
Secondly, talk to the insurer(s) about the Exclusion and negotiate an amendment to the Policy.
Finally document your discussions with the client and the insurer(s) and confirm the instructions in writing to all concerned parties.
Rent Default – Residential Landlords
Business Continuity Planning
All businesses, regardless of size, should prepare or review their Business Continuity Plan (BCP) during this time. Ensuring staff understand self-isolation processes, how to work from home and where to find company information is paramount to keeping your business continuing to run efficiently during this time.
Steadfast Group has created a BCP Toolkit you can use to implement in your business. You can download our BCP Toolkit here.
Commercial Motor – Vehicle Lay-downs
What if your client is proposing to take a number of their vehicles “off the road” during the current COVID-19 situation as they are not required. The client is looking to reduce their costs. What are the options?
1. Third Party Property Damage only
Not a preferred choice as it will not provide cover for the clients’ vehicles.
2. Static Risk Cover
This is an option that will provide cover to the client for their vehicles, but there is no road risk cover. As the name implies, it covers the vehicles at a specific location only for specified perils or alternatively all risks cover.
There are a couple of items to discuss with the client:
- There is no cover should the vehicles be driven off the premises.
- What if the client moves the vehicles whilst on the premises and damages the vehicle? If on a static policy, is this impact?
- If you move them off a Motor policy, and they remain registered vehicles, there may be no liability coverage.
What actions are required by you to protect your clients’ interests?
Firstly, talk to your client about:
- Where are the vehicles to be located?
- What are the risk management steps taken by the client for the protection of the assets whilst laid up, such as security, batteries disconnected, etc
- advise the client of the changes in cover.
Secondly, talk to the insurer(s) about the cover negotiate appropriate cover for the client, including an acceptable return premium on the vehicles no longer on the road.
Finally document your discussions with the client and the insurer(s) and confirm the instructions in writing to all concerned parties.
Contract Works – Cessation Exclusions
Most Contract Works policies have a Cessation of Works Exclusion. For example, in the CGU Steadfast Annual Construction Policy, the words read as follows:
“17. Damage arising from any abandonment of the Project or cessation of work for more than 30 days.”
Under the CGU Steadfast Single Project Construction Policy, it has the same Exclusion.
Q. What actions are required by you to protect your clients’ interests?
Firstly, talk to your construction client about:
- are any projects that will or may exceed 30 days.
- what is the reason for closing down the project – Government directive, Principal instruction, etc.
- advise the client of the Exclusion in the Policy.
- if they are closed or closing a project, what risk management steps are they taking to protect the site, such as security patrols, alarms, removal of tools and equipment, etc.
Secondly, talk to the insurer(s) about the Exclusion and negotiate an amendment to the Policy.
Finally document your discussions with the client and the insurer(s) and confirm the instructions in writing to all concerned parties.
Rent Default – Residential Landlords
Q. How will Landlord Insurance Policies respond to the Rent Default cover in the current circumstances?
This review is based on the Steadfast Direct Landlords wordings.
“Definition – Rent Default
Where the Tenant fails to pay Rent in accordance with a Rental Agreement and/or Periodic Tenancy Agreement.”
Wording – click on the following link and go to page 25 to view the detailed coverage and exclusions:
https://broker.steadfast.com.
An important question to ask you client – do they have a Rental Agreement in place. Our experience has shown that insurers will generally not respond to Rent Default claims if there is not a current Rental Agreement in place.
Landlords – Rent Default Option
Firstly, this is an optional extension, so will only apply if the client has elected to take out the cover.
Q. With a large proportion of the workforce working from home, what are the insurance implications for you to discuss with your clients?
Cover:
The types of cover vary by policy type and also within policy classes. Our comments are restricted to Steadfast wordings.
Business Insurance:
The Steadfast SCTP Business Insurance Policy provides the following cover for Temporary Removal:
“We will cover Your Stock or Contents while temporarily removed to any other premises including a temporary storage facility, self-storage unit or bulk storage facility within the Commonwealth of Australia.
Provided We will not cover:
(a) Vehicles, Watercraft or motorcycles unless they are
- Stock of the business, or
- forklift trucks and similar appliances that are used for hauling or lifting goods at Your Premises.
(b) Stock that is on consignment to other parties unless it is owned by You or is property for which You are responsible, or
(c) Stock or Contents that have been removed from the Premises for a period greater than 90 days without Our prior written consent.
The maximum amount We will pay for this Additional benefit will be twenty per cent (20%) of the Sum Insured for Contents or Stock.”
Q. What actions are required by you to protect your clients’ interests?
Firstly, talk to your client about:
- Are any staff working from home?
- If yes, do they have any of your Stock or Contents, such as computer equipment?
- Has your client vacated the premises?
- are you storing Stock or Contents away from the premises?
- Are you storing Vehicles, Watercraft or motorcycles, that are not Stock and do not have Motor Insurance?
- advise the client of the Exclusion in the Policy specifically to the Limit of 20% and the time limitation of 90 days.
- Is the value of the Stock or Contents greater than 20% of the Sum Insured for Stock or Contents?
- If yes, then you need to seek additional cover from the underwriter.
- Is the 20% limit per location, i.e. if you have 10 staff working from their respective homes, is it 20% per home? The wording states 20% of the Sum Insured, therefor it would be in total, rather than per home.
Secondly, talk to the insurer(s) about the Exclusion and negotiate an amendment to the Policy, if required. Insurers are generally looking favourably at such requests. We are seeking flexibility from our insurer partners in relation to the Temporary Removal limitations.
Finally, document your discussions with the client and the insurer(s) and confirm the instructions in writing to all concerned parties.
ISR
The Steadfast SCTP ISR Wording provides the following cover for Temporary Removal:
“This Policy does not cover physical loss, destruction of, or Damage to the following property or loss under Section 2 resulting therefrom:
1. Property (except Money) whilst in transit (other than during the movement of such property within situations occupied by the Insured where such property is not otherwise insured). This Exclusion shall not apply during temporary removal of property (other than stock and/or merchandise), including unregistered motor vehicles other than where used as stock and/or merchandise of the Business, to any situation within Australia and whilst at such situation. Whilst such property is in transit (excluding loading, unloading and storage in transit), cover is limited to physical loss, destruction or Damage caused by fire, lightning, explosion, earthquake, aircraft, riot, strikes, malicious Damage and storm and/or tempest.
2. The Insurer(s) liability shall not exceed the amount of the sub-limit stated in the Schedule of the policy against “Temporary Removal” for any one loss or series of losses arising out of any one event or occurrence.
For the purposes of Property Exclusion 1, The term ‘temporary removal’ means removal for a particular purpose, other than insured property out on hire, with the intention that the property be returned to the place from which it has been removed when that purpose has been served.”
Q. What actions are required by you to protect your client’s interests?
Firstly, talk to your client about:
- Are any staff working from home?
- If yes, do they have any of your property, such as computer equipment?
- are you storing property away from the premises?
- Are you storing vehicles that are not Stock and do not have Motor Insurance?
- advise the client of the Exclusion in the Policy
- The ISR wording does not have a time limitation for temporary removal
- The ISR wording does have a Limit of Liability for temporary removal, which is the sub-limit shown in the Policy Schedule. The default limit in the Steadfast wording is $100,000.
- Is the value of the property removed greater than 20% of the Sum Insured for Stock or Contents?
- If yes, then you need to seek additional cover from the underwriter.
- The other consideration for an ISR policy is the policy deductible. If your client is carrying a large deductible, say $5,000, this would in most cases be greater than the value of the laptop that the staff member has taken home. There are other options, such as the Protecsure offering, that may be more appropriate for some clients.
Secondly, talk to the insurer(s) about the Exclusion and negotiate an amendment to the Policy, if required. Insurers are generally looking favourably at such requests.
Finally, document your discussions with the client and the insurer(s) and confirm the instructions in writing to all concerned parties.
HOME INSURANCE
What do you need to consider for coverage under a Home or Contents policy if your staff are working from home?
Q. Is there any cover for your property under your staff’s Home and/or Contents policy?
Unoccupancy – Policy Conditions
Most property-based policy wordings have unoccupancy exclusions or conditions. In this section, we focus on the Steadfast wordings. If your client is not on a Steadfast wording, you should check their specific wording.
1. Home Insurance
Whilst most homes will be more occupied than normal during COVID-19, what if the client elects to stay in their countryside holiday home and leave their main residence vacant?
The Steadfast Direct Home Policy Wordings have the following clause:
“When Your cover does not apply
Your cover for Your Buildings, Contents and Valuable Items will not apply if, for a continuous period of 100 days or more, no one has occupied Your Buildings….”
Q. What actions are required by you to protect your clients’ interests?
If you are aware that your client has vacated their property:
- advise them of the 100 days limitation.
- ask if they are able to return to the property on a regular basis to remove the continuous condition of 100 days.
- ask them to have some sort of proof that the property has not been unoccupied for greater than 100 days.
- if this is not practical for the client, ask what risk management measures they have in place to protect the property, such as water turned off, real estate agent or neighbour regularly visiting, gardens being maintained, etc.
- seek underwriter approval to an alteration to the clause.
Finally document your discussions with the client and the insurer(s) and confirm the instructions in writing to all concerned parties.
If you provide a newsletter to your clients, you may want to include an article about unoccupancy as you may not know that the client is leaving their premises unoccupied.
2. Business Insurance
The Steadfast SCTP Business Insurance Policy has the following Exclusion:
“4. Unoccupancy
Unless we otherwise agree in writing, We will not pay for any loss or damage to Your Property Insured if the Occurrence happens after Your Premises has been unoccupied for more than 90 consecutive days…..”
This Exclusion applies to all Sections of the Policy, including the Liability section.
What actions are required by you to protect your clients’ interests?
Firstly, talk to your client about:
- are any of the client’s premises unoccupied or may be unoccupied that will or may exceed 90 days.
- what is the reason for the client’s premises being unoccupied – Government directive, Landlord directive, etc.
- advise the client of the Exclusion in the Policy.
- if they are closed or closing, what risk management steps are they taking to protect the site, such as security patrols, alarms, removal of stock and equipment, etc.
Secondly, talk to the insurer(s) about the Exclusion and negotiate an amendment to the Policy. Insurers are generally looking favourably at such requests. We are seeking flexibility from our insurer partners in relation to the Unoccupancy limitations.
Finally document your discussions with the client and the insurer(s) and confirm the instructions in writing to all concerned parties.
3. ISR
The Steadfast SCTP ISR Wording has the following Condition:
“Conditions Applicable to All Sections:
1 c) where any premises containing any Property Insured hereunder shall become unoccupied, and so remain for a period of more than (60) sixty days…”
With an ISR wording, it is not linked to a specific location. So not only is it the clients premises, it will also apply to where the client may have their property.
Q. What actions are required by you to protect your clients’ interests?
Firstly, talk to your client about:
- are any of the client’s premises unoccupied or may be unoccupied that will or may exceed 60 days.
- are any of the client’s property located/stored in any premises not owner or occupied by the client that will or may exceed 60 days.
- what is the reason for the premises being unoccupied – Government directive, Landlord directive, etc.
- advise the client of the Condition in the Policy.
- if they are closed or closing, what risk management steps are they taking to protect the site, such as security patrols, alarms, removal of stock and equipment, etc.
Secondly, talk to the insurer(s) about the Exclusion and negotiate an amendment to the Policy. Insurers are generally looking favourably at such requests. We are seeking flexibility from our insurer partners in relation to the Unoccupancy limitations.
Finally document your discussions with the client and the insurer(s) and confirm the instructions in writing to all concerned parties.