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24th July 2018

Surgeries insurance

Surgeries_InsuranceRunning a modern surgery, whether it’s doctors, dentists, veterinary or any other type is difficult enough without having to worry about adequate insurance cover.

Finding the right insurance policy to cover your surgery should be evaluated with care to make sure you are covered for the right replacement value and risk. Every practice is required by law to have employer’s liability insurance if staff are employed. You should also consider public liability, buildings and contents, business interruption and legal expenses.

Insurance brokers such as CLA can provide advice on property valuation, contents, legal expenses cover and any other insurance you may need such as business interruption.

Public liability insurance
Dealing with the public brings a multitude of risks and any business that is exposed to a claim for compensation should consider this cover a necessity, even though it is not a legal requirement. Defending a claim, even if not successful, can be very expensive.

Surgeries are often a higher risk than most business premises. A constant stream of patients, sometimes vulnerable or animals in pain can present volatile situations. A simple fall in surgery, personal assaults or damage to a patient’s property while on call are typical claims that can be covered.

Often included as part of your business insurance, public liability insurance can also be arranged as a standalone policy. Cover is generally for £5million; however, we recommend surgeries need up to £10 million depending on their local authority’s requirements or business risk.

Other cover can be arranged separately, if needed, for medical malpractice.

Buildings and contents insurance
Valuing your surgery to ensure sufficient cover is available for rebuilding may require an expert valuation to take account of special permanent fixtures you may have installed.

Contents cover will include medicines, vaccines, medical equipment, furniture and personal belongings. You will want to be adequately insured to be able to replace all these items at today’s prices. Regular valuations are recommended to include items brought in temporarily to deal with seasonal requirements such as flu vaccines.

Business interruption insurance
Often overlooked, business interruption insurance can be added to your policy to cover loss of revenue if an insured loss results in your surgery being closed for repairs.

If you experience a fire or flood for example and are unable to open your surgery for months while repairs are carried out, business interruption insurance will cover costs relating to the incident. Closure means loss of income, temporary relocation costs, storage or removal fees which are all covered.
Business interruption insurance will provide the financial support to keep your surgery operating and financially secure while repairs are carried out.

Legal expenses
Always worth considering because legal fees to defend disputes, including tax investigations by HM Revenue and Customs, can be very expensive. We recommend this cover because a single dispute can put a surgery in serious financial distress.

Surgeries Insurance
Insurance for surgeries requires specialist knowledge and experience for dealing with the specific claims incurred by a busy practice. CLA can provide advice and support when it comes to making a claim to ensure you keep your surgery protected to enable you to maintain your service to patients whether human or animal.
Many business owners are not aware of business interruption (BI) insurance or understand the benefits it provides. It is therefore easily missed when insuring your business against risks. If you use an insurance broker, they will usually assess whether this additional cover is needed for your business and offer it as an addition to your buildings and contents policy. However, if you use one of the online comparison websites, it would be natural to think your buildings and contents insurance would cover most eventualities.

Business interruption insurance is not necessary for all businesses but is crucial for some; for example, if you have equipment and machinery that is difficult to replace or carry a lot of stock that will take time to re-manufacture, this type of insurance cover could mean the difference between business survival and failure.

How does business interruption insurance work?
Cover is available as an add on to your buildings and contents insurance. If an insured risk affects the running of your business, or causes extensive damage to the buildings, machinery, equipment or stock, resulting in your business having to shut down for a period, the insurance will cover the financial losses, for example:
  • Loss of revenue due to closure.
  • Increased costs of working such as temporary relocation or equipment hire.
  • Additional employee costs for overtime or hiring temporary employees.
  • Temporary storage costs and removal fees.
  • Safety and security at temporary accommodation.
  • Loss of income from rent.
  • Long term effect of loss of sales and customers.
If your business is not in a position to recover quickly from a major incident, then business interruption insurance fills the gap.

For example:
Business_Interuption_InsuranceA fire engulfs a large section of your premises and damages equipment and stock. Your buildings and contents insurance will cover the repairs and replacement of equipment and stock, but this may take months to complete.

Flooding or water damage repairs can take months to make the building habitable again and unless you can easily relocate and hire machinery and equipment, your business could fail during the time it takes to start trading again.

Each business must assess their own level of risk and whether a major incident would be manageable without the financial support that business interruption insurance provides.

This is where an insurance broker can help. Talk to CLA (Risk Solutions), your local insurance broker in Sutton Coldfield to get a quote for how much it would cost to add business interruption to your buildings and contents insurance. Call 0121 321 4600

 
 
It is crucial that the correct and most suitable business interruption (BI) cover is in place for your organisation. Insufficient BI cover can result in your business not receiving a full indemnity which can significantly impact on your ability to recover following a loss.

Business_Interuption_InsuranceThere are three main types of business interruption cover: loss of gross profit, loss of gross revenue and increased cost of working.

Each of these covers operates in a different way and there are several reasons why they might be best suited to your particular circumstances.

We explain the differences between these three types of cover and discuss how we can help you choose the most appropriate cover for your business.

1. Loss of gross profit
A gross profit basis is the most common choice of business interruption insurance in the UK. This covers the loss of net profit following a reduction in turnover, standing charges and any increased cost of working.

Gross profit’s key distinguishing feature is that you can specify certain costs to deduct in order to arrive at their final sum insured. These deductions are known as variable costs or ‘uninsured working expenses’ (UWEs), and comprise costs that vary in direct proportion to the reduction in turnover. So, if turnover is reduced by 30% that cost will also be reduced by 30%.

The intention of UWEs is to enable you to not insure costs that will cease in the event of a loss. By insuring on a gross profit basis, any UWEs are excluded, reducing the exposure base to which a BI rate is applied, which means your premium is likely to be less.

However, incorrectly specifying UWEs is a common source of underinsurance, as many customers do not undertake the proper processes required to identify them.

Who is it suitable for?
The gross profit basis was initially developed for customers with many directly variable costs, such as those in the manufacturing and retail sectors. However, as business models have changed, it is no longer the case that these business types are always best suited to a gross profit basis of cover.

Using generalisations about business types is not the correct approach to take, you need to think carefully about what would happen in the event of a loss – which costs would cease and which would continue?

2. Loss of gross revenue
If, having carefully considered loss scenarios there are few directly variable costs, then a different basis of cover, such as loss of gross revenue, may be more suitable. A gross revenue basis covers the reduction in turnover following a loss and any increased cost of working. This could help avoid some of the inherent difficulties in calculating a gross profit sum insured and reduce the risk of underinsurance.

To calculate a gross revenue sum insured, you simply need to know the total turnover of your business for the length of the indemnity period. This avoids many of the intrinsic pitfalls in the gross profit calculation and can help provide a more accurate sum insured where a gross profit basis would bring few or no additional benefits.

Who is it suitable for?
Traditionally, gross revenue has been considered most suitable for the service industry, including businesses such as accountants, solicitors and hotels.

This is because the majority of these businesses’ costs, such as staff and IT, will not reduce in direct proportion to turnover in the event of a loss. These businesses will therefore typically have very few UWEs, giving them less incentive to opt for a gross profit basis, which may leave them exposed if an inaccurate sum insured is calculated.

As mentioned previously however, generalising should be avoided and we would assess your business according to how your particular business operates.

3. Increased cost of working
As detailed above, increased cost of working cover is included within both the gross profit and gross revenue bases, where it is subject to an ‘economic limit’. However, it can also be arranged in isolation, in which case it will not be subject to an economic limit.

Increased cost of working is essentially the bare bones BI cover. It provides the customer with cash to cover reasonable additional expenses that will help the business recover following a loss.

Definition: Increased cost of working
Additional costs incurred in order to prevent a further reduction in turnover.
    These might include:
  • Staff overtime
  • Hiring temporary staff
  • Sourcing alternative premises including rental costs
  • Installing new/temporary means of communication
  • Removal and storage fees
  • Advertising ‘business as usual’
  • Costs of sensitive waste disposal – linked to documents or IT equipment containing sensitive data.
  • Security and fire protection costs – involved with making the damaged location and any temporary location secure
Who is it suitable for?
This basis is only suitable for customers whose business continuity planning and management is such that they will be very resilient to a loss; for example, businesses that are able to easily minimise the impact to their business and might simply require some additional cash to put an established recovery plan into action.

Large multinationals often choose an increased cost of working basis as they might be relatively unaffected by a loss at a single location, have large cash reserves to rely on and may be able to absorb lost capacity in other areas of the business.

How we can help
Business interruption insurance is complex, we will be able to advise you on the best cover for your business.
Business-threats-2017Allianz has produced their Risk Barometer for 2017 which identifies top three corporate perils for UK businesses.

The figures are based on the responses of more than 1,200 risk experts from 50+ countries.

At the top of the list in the UK is cyber incidents with 48%. The toughening of data protection regulation put this at the forefront of risk experts’ minds, as penalties for non-compliance will be more severe.

Second was business interruption (BI). Physical perils such as fire and explosion are top causes of BI that businesses fear most, but non-physical or non-damage causes are becoming a much bigger issue; for example, supplier failure or cyber incidents.

Macroeconomic developments moved up from sixth position last year to third.

Cyber insurance
It is no longer a case of, if your business suffers a cyber-attack, but when. Cyber-crime has moved to the top of Allianz’s barometer with hardly a week passing without the media reporting a high-profile case of hacking or ransomware attack. And this does not include smaller businesses where breaches go unreported.

Cyber insurance can provide the cover that could be the difference between the survival or bankruptcy of your business.

Business interruption insurance
Disruptions can be caused by a wide variety of risks; fire, flood or a leaking pipe. Your commercial insurance policy will cover the material losses, but if your business is forced to close following an incident, this is when business interruption insurance is invaluable.

The policy will cover loss of income following an insured incident.

Macroeconomic
It is not surprising this has moved up the Risk Barometer in 2017, with more uncertainty, driven by growing concerns over political, legal and regulatory developments globally.

Allianz possess strong underwriting and risk management capability which means they can offer cover and access to business specific risk guidance ensuring that businesses are properly protected.

To protect your business from business risks in 2017, talk to one of our account executives at CLA to find out more.
27th June 2012

Business interruption

Last year's riots brought the lack of business interruption cover to the fore. With the Olympics only a matter of weeks away, it pushes the subject back up the agenda and is vital for businesses to ensure current policies reflect the growth of their business.

An insurance industry survey recently announced that small businesses appear to be most at risk from the effects of a major disruption, with only 5% of its sample surveyed believing that small and micro businesses have plans in place...

CLA-Business-interruptionHowever, with the Olympics weeks away, and London on a high terrorism alert, the need to check cover is more important than ever. Business interruption insurance (BI) requires concentrated attention because it cannot be altered after an incident occurs, and its purpose is to restore your business to the same financial position as if the loss had not occurred, but this type of policy can be misunderstood leaving organisations vulnerable at a time of need. Last year's riots showed that, for a variety of reasons, businesses had less cover than they thought and were under-insured. Under-insuring will often affect the amount of money your business will receive when you come to make a claim and can prove to be a false economy.

For example, if your business contents should be insured for £100,000 – but you have insured them for only £75,000. There is a major fire and you need to make a claim for £30,000. You might think that the insurance company will pay you the whole of the claim, because it is less than the amount of your sum insured. Unfortunately this is not the case. Because the business was only insured for 75% of the value of your business contents (and were therefore only paying 75% of the premium for the insurance it needed), the insurance company will only pay 75% of the claim. So if you have increased stock, equipment etc. to cater for the Olympics as a business you should review your Sums Insured so that your insurance cover doesn’t fall behind as your business develops.

For further information on business interruption, or if you would like to review your current policy to bring it in line with current business requirements.