Insights

What Are The Fundamental Principles of Marine Insurance?
What Are The Fundamental Principles of Marine Insurance? 800 533 James Hallam

In this post we will explain six fundamental principles of marine insurance. The principles of marine insurance may determine the outcome should you ever need to make a claim on your policy.

What are the fundamental principles of marine insurance?

  • Utmost Good Faith
  • Insurable Interest
  • Indemnity
  • Proximate Cause
  • Contribution
  • Subrogation

Principle of utmost good faith

Sometimes referred to by the Latin phrase Uberrimae Fidei, the principle of utmost good faith is basically an agreement that all parties in a marine insurance agreement will be totally honest with each other.

This means that neither the insurer nor the policyholder will falsify or misrepresent any aspect of the agreement. The insurer, for instance, will not mis-sell the policyholder any cover they do not need. Meanwhile, the policyholder will be completely transparent when taking out the policy and will not, for example, misrepresent the age of their ship.

Should either party violate the principle of utmost good faith, it can void the insurance agreement.

Principle of insurable interest

This means that a person can only insure objects in which they have a financial stake. If they would not suffer any financial losses as a result of loss or damage to the object, then they cannot buy insurance for it.

This principle forms the basis of all insurance policies, and it is largely a means of preventing situations where policyholders might actually profit from allowing, or intentionally causing, a loss.

Principle of indemnity

The principle of indemnity means that the settlement the policyholder receives will never exceed the total value of the loss they incurred.

This principle is in place to prevent policyholders from using their marine insurance policies to make a profit, such as through allowing or intentionally causing a loss.

Principle of proximate cause

The principle of proximate cause is designed to simplify the claims process through determining exactly how an instance of loss or damage occurred.

For example: An incident at sea may result in loss or damage to a policyholder’s cargo. Upon investigation, the insurers find that the loss could be attributed to two or more events. In this case, the insurers will aim to determine the proximate cause – the closest or most plausible cause that resulted in the damage.

A marine insurance policy wording will specify the events that are covered, and those that are not covered. The principle of proximate cause allows insurers to ensure that they only provide settlements for insured events, while preventing policyholders from making claims for instances for which they were not insured.

Principle of contribution

The principle of contribution allows policyholders to insure the same object for the same risks with two different insurance companies.

Shipping contracts can get very complex, very quickly. Marine businesses may need multiple policies to cover different jurisdictions, for example. Allowing for overlap between multiple policies allows the policyholder to get full cover for their ship or cargo, from beginning to end.

If the policyholder needs to make a claim on these overlapping policies, the two insurers may work together to split the liabilities.

Principle of subrogation

If the policyholder makes a claim on their policy following an insured incident, the insurer will pay them the settlement to which they are entitled. However, following this, the principle of subrogation allows the insurer to assume future ownership of the cargo.

The insurer may try to salvage and sell the cargo themselves, in order to recuperate the cost of the settlement. But if the policyholder attempts to sell their cargo after making a claim for loss or damage, they may be obliged to donate any money they make to their insurer.

This is a further principle that is designed to prevent policyholders from profiting from their insurance arrangements. Without this principle, unscrupulous policyholders would be able to intentionally damage their goods in order to receive two separate paydays – one for the ultimate sale of the goods, and one from their insurance settlement.

Why it is important to understand marine insurance principles

Understanding these key principles of marine insurance is vital if you want to know exactly what to expect should you ever make a claim on your policy.

These various principles will determine your responsibilities in the claim process, along with your insurer’s responsibilities. They could also determine the settlement you receive, and the ultimate fate of any cargo that might be lost or damaged during an incident.

Have any questions about marine insurance?

If you have any questions about marine insurance, or you want to ensure you have all the insurance you need for your ship or cargo, we are here to help.

Everard Insurance Brokers are the specialist marine trading division of James Hallam Limited who are accredited Lloyd’s brokers.

Find out more about our specialist marine insurance services.

Cyber Security For Travel Agents & Tour Operators – How To Protect Your Business
Cyber Security For Travel Agents & Tour Operators – How To Protect Your Business 1280 853 James Hallam

Cyber criminals are actively targeting the travel and tourism industry. According to one report, 72% of SMEs in the travel sector have fallen victim to at least one cyberattack in recent years.

In this post we will outline the key cyber security threats for travel agents and tour operators, and explore some ways you can protect your business.

Cyber Security Threats for Travel Agents & Tour Operators

  • Ransomware – Cyber criminals can encrypt your files, making your online systems unusable unless you pay a costly ransom. If you do not pay this ransom, the cyber criminals will either delete your files, or they will leak them. This will put you and your customers at risk of further exploitation.
  • Data Breach – If hackers gain entry to your system, they might choose to steal your data outright, rather than encrypt it as part of a ransomware attack. A data breach will put your customers at risk of identity theft, and it will also result in significant reputational damage for your business.
  • SQL Injection – Structured Query Language (SQL) is a form of coding used in database management. An SQL injection involves submitting malicious code into a data entry field on your website, which can allow hackers to access your database.
  • Phishing – This is a means, rather than an end, of cyberattacking. It involves sending a fake message, usually via email or text, that appears genuine. This can trick employees into providing login codes, or other entry points into your system, leaving your business vulnerable to further cyberattacks.

Why Are Cybercriminals Targeting Travel Agents & Tour Operators?

There are a few reasons why travel agents and tour operators are prime targets for cybercriminals:

  • Valuable Data – You will handle huge amounts of sensitive customer data as part of your work, all of which can prove immensely valuable to cybercriminals.
  • Multiple Points of Attack – With an increasingly remote workforce, and multichannel booking and communication systems, cybercriminals have multiple points of attack.
  • Lack of Awareness – Your employees specialise in travel, tourism, and customer service. They may not be so experienced when it comes to IT and cybersecurity. As such, they may not recognise a phishing email until it is too late.
  • Lack of Resources – Around 80% of travel and tourism businesses are SMEs. Cybercriminals tend to target smaller businesses over larger businesses. This is because they know that smaller businesses are less likely to have the resources in place to protect themselves against cyberattacks. As a result, following a ransomware attack, many SMEs will have no choice but to pay the hackers’ ransom.

How To Protect Your Travel and Tourism Business Against Cyberattacks

Establish Your Cybersecurity Policy and Procedures

Your cybersecurity policy and procedures document should outline the risk your business faces, along with the steps you expect all employees to take in to safeguard your data. This can include basic procedures, such as always locking devices when they are not being used, along with policies for ongoing staff training.

Make sure everyone can access your cybercrime policies and procedures and take steps to communicate it across your organisation. You should also routinely review and update the document to meet new and emerging cybersecurity threats.

Staff Training and Development

Ensure that employees at all levels of your business understand the risks of cybercrime, and the part they can play in keeping themselves, and the business, safe. At the very least, you should ensure that every member of staff knows how to recognise a phishing attack.

Cybersecurity training should form part of your employee induction process, and all staff should receive refresher training at least once a year.

If any of your employees work from home, your cybersecurity training should cover how staff can safeguard customer data when accessing your system remotely.

Consider the Role of Cybersecurity Consultants

A third-party cybersecurity consultant can assist you in threat modelling, helping you to understand the vulnerable areas in your network. They can also run network vulnerability and penetration testing, which can involve simulating a cyberattack to assess how you might enhance your security.

Invest in Cybersecurity Software

A good antivirus system usually includes multiple cybersecurity features, including automatic blocks for malicious websites and unwanted network access. Invest in a good system, and make sure you update it as often as possible.

Software updates are a vital part of any cybersecurity policy, as cybercriminals are constantly looking for vulnerabilities in outdated software. As well as keeping your cybersecurity software up to date, also be sure to regularly update any software you use to manage your website, your customer database, and your accounts.

Ensure you have Cybersecurity Insurance

Finally, a cyber insurance policy can provide cover for customer data loss, and for system breaches. While this might not prevent attacks from occurring in the first place, it can at least help your business recover should you ever fall victim to a cyberattack.

At James Hallam, we can provide you with comprehensive cyber insurance cover as part of a wider travel and tourism insurance package.

Find out more about our cyber insurance for businesses as well as our comprehensive insurance policies for travel agents and tour operators.

For more information, call us on 0207 977 7856 or email Nic.Wheele@JamesHallam.co.uk.

Supplier Failure Insurance For Travel Agents & Tour Operators: What Is It and How Does It Work?
Supplier Failure Insurance For Travel Agents & Tour Operators: What Is It and How Does It Work? 1280 854 James Hallam

Supplier failure insurance is a critical form of cover for travel agents and tour operators, providing essential peace of mind for both you and your customers.

In this post we will explain what supplier failure insurance for travel agents and tour operators is, what it covers, and why you need it.

What is Supplier Failure insurance for travel agents & tour operators?

If you book flights or other travel services for your customers, supplier failure insurance will cover you if the airline or other travel providers suffer financial failure and go out of business.

If an airline or travel provider goes bankrupt, then they will no longer be able to provide your customers with the services that they have already paid for. Supplier failure insurance, also known as end supplier failure cover, will allow you to submit a claim for your financial loss, so that you can provide your customers with an alternative means of travel or accommodation.

What does Supplier Failure insurance cover?

If a supplier goes out of business after your customer has paid for their services, supplier failure insurance can cover:

  • Refunds for any unused tickets, hotel bookings, or other travel arrangements.
  • Additional expenses incurred if the customer needs to make alternative arrangements for travel and accommodation.
  • Return costs, if the customer is unable to continue their trip because of supplier failure.

This insurance can provide cover for a range of travel suppliers, including:

  • Airlines
  • Hotels
  • Car hire companies
  • Coach operators
  • Railways
  • Car ferries
  • Tour operators

What is the difference between Supplier Failure insurance and Financial Failure insurance?

Financial Failure Insurance provides a means of reimbursing your customers if you go out of business.

While financial failure insurance covers your customers if your business ceases trading, supplier failure insurance provides cover should other businesses you work with cease trading.

All travel agents and tour operators should have both forms of cover in place in order to offer their customers full protection.

For more, read our full guide to financial failure insurance for travel and tourism businesses.

Do I need Supplier Failure insurance?

If you sell flight inclusive packages as part of your travel agent or tour operator business, then you have a legal obligation to get an Air Travel Organisers’ Licence (ATOL). As part of this, you need to provide a means of protecting your customers’ money in case airlines or other travel companies go out of business.

This means that if you arrange flights for your customers, and if you are part of the ATOL scheme as a result, then you may have a legal requirement to get supplier failure insurance for your customers.

Even if you do not book flights for customers, it is still a good idea to get supplier failure insurance. It will provide essential peace of mind for both you, and your customers.

How to ensure you are fully covered as a travel agent or tour operator

At James Hallam, we have provided dedicated insurance services for travel agents and tour operators for over 20 years.

We will take the time to understand your business so we can tailor the best possible travel and tour insurance programme for you and your customers. This can include supplier failure insurance, and we will also advise the additional cover you may need to get comprehensive insurance at a competitive price.

Find out more about our specialist insurance services for travel agents and tour operators.

mobile catering van

What Insurance Do I Need For a Mobile Catering Van?
What Insurance Do I Need For a Mobile Catering Van? 700 467 James Hallam

All catering businesses need some form of insurance cover. But if you run a mobile catering van, a food truck, or an ice cream van, you will face certain additional risks that fixed-site cafés and restaurants will not have to worry about.

In this post we will explore the insurance you will need to consider for a mobile catering van, to make sure you are covered for all possible risks and liabilities.

What risks do catering businesses face?

There are many risks associated with preparing and serving food to members of the public. Any catering business will need cover for any accidents, injuries, and illnesses customers may sustain as a result of interacting with your business, including food poisoning and allergic reactions.

Specific risks catering vans face

If you have a catering van business, though, you will face additional risks that you would not face if you were running a fixed site café or restaurant. As well as cover for your equipment, you will also need specialist commercial vehicle insurance to cover your catering van. On top of this, the cover you get for your stock will have to extend to provide cover for transit.

Plus, your insurer will have to consider the risks associated with serving different customers in different locations from one week to the next. For example, what if you accidentally hit a child’s head when you’re opening your serving hatch?

Beyond all of these risks, mobile catering vans will have to manage the sort of risks that face any business in any sector, including fires, floods, theft, business interruption, personal injury, and so on.

What insurance do I need for a mobile catering van?

  • Public Liability Insurance – This can cover most accidents, injuries, and illnesses members of the public may sustain as a result of interacting with your business, along with any damage you may cause to public property.
  • Product Liability Insurance – If a customer ever gets food poisoning, or suffers an allergic reaction, as a result of consuming food you serve, product liability insurance can cover any compensation they may be due, along with any legal fees you may have to pay.
  • Commercial Vehicle Insurance – You will need comprehensive cover for your vehicle. This will cover any repairs your vehicle may need following an accident, as well as any repairs that may be necessary for any other vehicles or property involved in an accident.
  • Contents Insurance – Cover for your cooking equipment and furnishings, along with your stock. If you have a catering can, the cover you get for your stock will also have to cover it for loss, damage, or spoiling during transit.
  • Employer’s Liability Insurance – If you employ any staff, you have a legal obligation to get employer’s liability insurance. This will cover any compensation an employee may be entitled to if they sustain any illnesses or injuries on the job.

Find out more about our specialist catering insurance and who it covers.

Get specialist catering insurance from James Hallam

James Hallam is an independent Lloyd’s broker with access to a hand-picked selection of A-rated insurance providers.

We know that no two catering businesses are quite the same, and that mobile caterers face a host of additional risks and liabilities. As a result, we will take the time to get to know you, your business, and your customers. In this way, we can design a catering insurance package that truly meets your needs at a competitive price.

Get in touch for a free quote today.

warehouse

What is Commercial Combined Insurance?
What is Commercial Combined Insurance? 600 400 James Hallam

All businesses face a range of risks, including fire, flood, theft, business interruption, cybercrime, and more. You will need adequate insurance to cover your business should anything ever go wrong.

As an alternative to getting separate policies to cover individual risks, many businesses instead choose a commercial combined insurance policy.

In this post we will discuss what a commercial combined insurance policy is, and what it covers, to help you decide whether it is the right choice for you.

What is Commercial Combined insurance?

A commercial combined insurance policy includes various types of business insurance cover in a single policy. Getting a commercial combined insurance policy can be the most convenient choice for many businesses. Rather than taking out multiple policies to cover multiple liabilities, businesses can instead get extensive cover with a combined policy.

What does Commercial Combined Insurance cover?

Most insurers will tailor your commercial combined insurance policy to meet all the risks you face in your business. Most policies will include the following:

  • Buildings Insurance – Cover for damages to your business premises, alongside any machinery, equipment, furnishings, and stock.
  • Cyber Insurance – This can cover any liabilities and expenses you might face if your business falls victim to a cyberattack, or a data breach.
  • Business Interruption Insurance – If you are forced to temporarily cease trading due to a fire, a flood, or another covered event, business interruption insurance can cover your loss of revenue, your increased costs of working, and other specified expenses.
  • Public Liability Insurance – If a member of the public gets injured on your premises, or if you damage public property while conducting business, public liability insurance can cover any legal costs you may be liable to pay.
  • Employer’s Liability Insurance – All businesses have a legal duty to get employer’s liability insurance if they employ any staff. It covers any compensation an employee may be entitled to if they sustain any illnesses or injuries on the job.
  • Product Liability Insurance – If you manufacture and distribute products as part of your business, product liability insurance will cover you for any loss, illness, or other damages linked to your products.

Find out more about what our Commercial Combined Insurance policies cover and who they’re for.

What are the benefits of Commercial Combined insurance?

Having a commercial combined insurance policy over separate policies can be beneficial for a number of reasons, including being:

  • Convenient – With a commercial combined insurance policy, there is no need to shop around for multiple policies to cover every aspect of your business. Plus, if you ever need to make a claim on your policy, you will only ever have to make one call, which can streamline the process.
  • Cost-Effective – Some insurers offer discounts if you buy a combined commercial insurance policy in place of multiple policies. Plus, if you have multiple policies, there may be overlaps in your cover. This might mean you end up paying more for insurance you do not really need.
  • Comprehensive – Get all the cover you need in one policy, and you will not need to worry about underinsurance, or in any gaps in your cover. Plus, most insurers will tailor your commercial combined insurance policy to ensure it meets your exact needs, including your budget needs.

We can help you get all the cover you need at the best price

James Hallam is an independent Lloyd’s broker with access to a hand-picked selection of A-rated insurance providers.

If you want to get all of your cover needs met by a combined commercial insurance policy, we can help you ensure your policy ticks all of your boxes at a truly competitive price.

Get in touch to get a free quote today.

Types of Marine Losses – A Quick Guide
Types of Marine Losses – A Quick Guide 800 533 James Hallam

We recently published a guide to the different types of marine insurance. We explored various different insurance products, and what they cover. In this post we will provide an overview of the different types of losses in marine insurance, to help you further understand the role marine insurance can play in protecting your business.

Different Types of Marine Loss

In this post, we’ll cover the following types of marine losses:

  • Actual total loss
  • Constructive total loss
  • Particular average loss
  • General average loss

Actual Total Loss

Actual total loss (ATL) is a situation where a ship, or its cargo, has been completely lost or destroyed. Or, the ship or cargo has been so severely damaged that repairs or salvage is no longer economically feasible.

How do ATL Claims Work? ATL claims are usually quite straightforward. If you experience total loss of your ship or cargo, you make a claim on your policy, and your insurer will then take ownership of your ship’s wreckage, or your lost, damaged, or stolen cargo. You will then be entitled to a settlement that is equal to the ship’s or the cargo’s full value, as specified in your policy wording.

Constructive Total Loss

Constructive total loss (CTL) is a situation where a ship, or a cargo, is significantly damaged to the point that the cost of repair or recovery would exceed the insured item’s value.

Typically, a marine insurance policy will specify a percentage of insured value that will trigger a CTL situation, usually around 75%. So, if the cost of repairs or recovery exceeds this percentage, it would automatically trigger a CTL situation.

How do CTL Claims Work? CTL claims are generally more complicated than ATL claims. When you make a claim for a CTL situation, you have the option to let your insurer take ownership of your insured property. Your insurer may then sell this property as salvage and use the proceeds to offset your settlement. If you prefer, you can retain ownership of your insured property, but you may receive a smaller settlement as a result.

Read our full guide to constructive total loss in marine insurance.

Particular Average Loss

Particular average loss is a type of partial loss. It is cover for when some, but not all, of your cargo is damaged or lost as a result of an incident. The term refers to losses as a result of a specific cause (hence, “particular”).

How do Particular Average Loss Claims Work? In a particular average loss claim, only the owner of the damage property is entitled to compensation. The amount of compensation received is based on the extent of damage or loss suffered as a proportion of its full value.

General Average Loss

General average is a principal in marine insurance outlining that all stakeholders proportionately share any losses resulting from incidents at sea. Specifically, the general average principal applies to situations where crew members voluntarily sacrifice part of a ship’s cargo in order to save the whole. For example, through deliberately throwing cargo overboard to prevent a ship from sinking, or intentionally taking on some water to extinguish a fire.

What’s the Difference between General Average Loss and Particular Average Loss?

A key difference between particular average loss and general average loss is that, in a particular average loss situation, only one policyholder will receive compensation. On the other hand, in a general average loss situation, the compensation will be distributed equally among numerous stakeholders.

Read our full guide to general average in marine insurance.

Get Comprehensive Marine Insurance From James Hallam

Everard Insurance Brokers are the specialist marine trading division of James Hallam Limited who are accredited Lloyd’s brokers.

As we deal with a wide range of niche insurance providers, we can arrange the cover you need, whether you are looking to cover a single vessel or an entire marine trade supply chain.

Find out more about our specialist marine insurance services.

What is Constructive Total Loss in Marine Insurance?
What is Constructive Total Loss in Marine Insurance? 800 533 James Hallam

Marine insurance policies cover businesses for various different kinds of losses. In this post we will explain what constructive total loss is, and how it differs from other types of loss.

What is Constructive Total Loss?

In the marine industry, insurers will consider constructive total loss (CTL) following significant damage to ships or cargo. Specifically, they will consider CTL when the cost of repair would be greater than the ship or cargo’s insured value.

Most marine insurance policies will specify a percentage of insured value that will trigger a CTL situation. This is usually around 75% of the insured value of the ship or cargo. If the cost of repairs or recovery exceeds this percentage, it can automatically trigger a CTL situation.

In a CTL situation, the insurer may offer a settlement that is equal to the cargo’s value, having subtracted certain charges. If the ship or cargo owner does not want to accept this settlement, they may instead retain the damaged cargo along with a lower settlement.

When Will Marine Insurers Consider Constructive Total Loss?

Marine insurers will only consider CTL if the circumstances leading to the loss meet certain criteria, including:

  • The ship carrying the cargo is stranded or grounded. If it cannot take to sea again, or if the cost of doing so would be prohibitively expensive, the insurer may consider a CTL settlement.
  • A natural disaster, such as a hurricane or a cyclone, damages the cargo beyond repair.
  • A man-made disaster, such as a collision with another ship due to human error, leads to significant damages that would cost more to repair than the amount insured.

What is Actual Total Loss in Marine Insurance?

CTL applies to situations where cargo is significantly damaged, but it remains, in theory, repairable or recoverable. Another type of loss – actual total loss (ATL) – applies to situations where the cargo is so severely damaged that repair or recovery is simply not possible.

Examples of ATL situations include natural or man-made disasters that result in irreparable damages, such as fires, flood, hurricanes, explosions, or collisions. If the ship is hijacked, or the cargo is stolen, it may also constitute an ATL situation, as it may become impossible to recover the cargo.

In an ATL situation, the policyholder is entitled to receive a settlement that is equal to the ship’s or the cargo’s full value.

What’s the Difference Between Constructive Total Loss and Actual Total Loss in Marine Insurance?

If you experience significant losses as part of your marine business, depending on the specific circumstances of your case, your insurer can either declare it as a CTL or an ATL. Broadly speaking, they will declare it a CTL if the cost of repairs or recovery is prohibitively high, and an ATL when repairs or recovery is essentially impossible.

For example, if a ship is stranded, and it would cost too much to recover it, the insurer will declare it as a CTL situation. But if the ship sinks, or if it is damaged in such a way that it is no longer seaworthy, the insurer will declare it to be an ATL situation.

Another key difference between the two situations is who takes ownership of the wreckage. In an ATL situation, the insurer will take ownership of any wreckage or insured cargo. Yet in a CTL situation, the policyholder has the option of retaining ownership in exchange for a reduced settlement.

Claiming For Loss on Your Marine Insurance Policy

Claiming for ATL is relatively straightforward. You need to file a claim with your marine insurance company, who will then work to confirm your loss, and pay you the full value of the lost or damaged property as a specified in your policy wording. As part of this, you may need to provide proof of ownership, along with evidence of the property’s value.

Claiming for CTL can be a bit more complicated. Upon making a claim, you have the option to surrender your ownership of the property to your insurer, who can then sell the property as salvage, using the proceeds as part of your settlement. Alternatively, you can choose to retain ownership of the property so as to salvage it yourself, on the understanding that your insurer can deduct this salvage value from your settlement.

If you are facing a CTL situation, be sure to check your policy wording, and to talk to your insurers, before you make a claim, so as to be sure of your rights and responsibilities.

Worried About Losses at Sea? We Are Here to Help

If you are worried about your rights and responsibilities following significant losses, then we are here to help. Everard Insurance Brokers are the specialist marine trading division of James Hallam Limited who are accredited Lloyd’s brokers. We have a dedicated team of experienced insurance professionals who are committed to protecting your marine business and have a deep understanding of every aspect of the maritime industry, and the various insurance implications.

Find out more about our specialist marine insurance services.

OCIP vs CCIP: What is The Difference and Which Should I Choose?
OCIP vs CCIP: What is The Difference and Which Should I Choose? 800 534 James Hallam

If you are a property developer, or you are managing a large construction project, you have a choice about the sort of insurance you get to cover your project.

Broadly speaking, it is a choice between an owner-controlled insurance programme (OCIP) and a contractor-controlled insurance programme (CCIP).

In this post we will explain the difference between the two arrangements, to help you decide which is best for you.

What is OCIP?

OCIP stands for owner-controlled insurance programme. It is designed to provide comprehensive cover for key parties involved for the duration of a construction project. As the name of the programme suggests, an OCIP is usually purchased by the owner of the construction project, such as a property developer.

What is CCIP?

CCIP stands for contractor-controlled insurance programme (CCIP). This is designed to provide cover for all contractors and subcontractors involved in construction projects. A CCIP is typically purchased by a contractor, which means that the owner may not pay the premiums themselves.

What is the Difference Between OCIP and CCIP?

The biggest difference between an OCIP and a CCIP is the level of cover provided by each arrangement. OCIPs provide comprehensive cover while CCIPs are not as comprehensive.

Usually, OCIPs provide comprehensive cover for all aspects of a construction project, including property damage, personal injury, and certain liabilities. OCIP coverage can extend to contractors and subcontractors, along with their employees, and it can even cover third-party claims.

CCIPs, on the other hand, are not as comprehensive. They are usually purchased directly by contractors, and as such will only cover that contractor, along with any subcontractors they appoint.

Plus, CCIPs are often a lot more limited in scope. While an OCIP can cover an entire construction project, from start to finish, CCIPs are usually purchased on a project-by-project basis. This means that the coverage may stop as soon as the contractor’s involvement in the project comes to an end.

OCIP vs CCIP: Which Should I Choose?

There are certainly some benefits to choosing a CCIP. This arrangement can be a lot more affordable than purchasing an OCIP. Plus, letting contractors arrange their own insurance can help streamline construction projects.

Yet if you are overseeing a construction project, only an OCIP will guarantee you the cover you need, for as long as you need it.

With an OCIP, the property developer will have full control over the entire policy, and all of the associated costs. This means:

  • You get to choose the extent of your cover, so you can ensure that everyone involved in the project is covered for every risk. With a CCIP, the contractor may overlook certain risks, which may lead to a costly underinsurance situation.
  • The entire project, from start to finish, can be covered under a single policy. This is often the most cost-effective approach. If there are multiple contractors involved in the project, there may be multiple CCIPs. This could result in overlaps across the various premiums, meaning you may pay extra for cover you do not need.
  • An OCIP can also streamline the claims process. Rather than potentially making multiple claims on multiple policies, you will only have to make a single claim on a single policy. Plus, all settlements will be made directly to your business.

Be sure to read our full guide to your insurance requirements as a property developer.

Specialist Insurance Services for Property Developers

If you are worried about your insurance requirements as a property developer, we are here to help.

We are an independent Lloyd’s broker with a dedicated team of experienced insurance professionals. At James Hallam, we know that no two property development projects are ever quite the same. This is why we will take the time to understand your risks so we can tailor a flexible and cost-effective property developer insurance package that offers all the cover you need.

We can help you ensure you have enough cover to protect your project, at a competitive price. Get in touch for a free quote today.

New Rules For Multi-Occupancy Buildings Insurance – One Year On
New Rules For Multi-Occupancy Buildings Insurance – One Year On 800 800 James Hallam

In December 2023, the Financial Conduct Authority (FCA) set out new rules for multi-occupancy building insurance. These rules only apply to residential leaseholders. They do not affect commercial properties.

In this post we will review the new rules that came into play and assess the effect these new rules have had on the market over the past year.

Why Were New Rules For Multi-Occupancy Buildings Insurance Introduced in 2023?

The FCA’s new rules were devised in response to certain concerns that surrounded insurance for high-rise buildings following the 2017 Grenfell Tower fire. It was found that the insurance market was not working in the interests of leaseholders.

On buildings insurance policies for multi-occupancy properties, the freeholders are the insured party, rather than the leaseholders. As a result, insurers and brokers rarely considered leaseholders’ needs. On top of this, leaseholders did not have a say in how their cover was arranged, and they had no means of challenging any decisions made about their cover.

The FCA established new rules to apply to all leasing contracts completed from 31 December 2023, including renewals. The new rules apply to the building insurance policies for any leasehold dwelling in the UK, of any size and of any type. Specifically, the changes are intended to benefit leaseholders who pay a “service charge” as part of their lease, which contributes to building insurance cover.

The only instances where these rules do not apply are in commercial properties leased by businesses, and in rented accommodation where there is no itemised cost for insurance.

The FCA’s NEW Rules For Multi-Occupancy Building Insurance

The new FCA rules are as follows:

New Disclosure Documents

There must be more transparency over any decisions made about a building insurance policy by freeholders. Plus, new disclosure documents are now necessary to make it clear to leaseholders exactly what they are getting for their insurance premiums.

The FCA stipulate that these documents must be designed with a consumer audience in mind, meaning that they must be more accessible and not contain overly technical language.

Insurers and brokers have a responsibility to share these documents with policyholders, who then have an obligation to share them with leaseholders. For more information, you can read a full guide to the content that the FCA outlines for these disclosures.

Leaseholders are Now Considered Customers

As leaseholders are now considered customers in insurance arrangements, insurers and brokers must provide the same level of service and transparency as they would to any other customers.

This has numerous implications on how insurers and brokers operate. For example, under this new rule, insurers and brokers must ensure that any renumeration decisions are not just in the freeholder’s best interests as a policyholder, but also in the leaseholders’ best interests.

Insurers and Brokers Must Provide Fair Value to Leaseholders

As leaseholders typically pay their own insurance premiums, then insurers and policyholders have an obligation to deliver a valuable product at a fair price, with total transparency on any pricing decisions.

The Effect of the New Rules For Multi-Occupancy Buildings Insurance One Year On

These new rules have been in place for almost a year now. How has it affected the insurance market for multi-occupancy buildings?

The new rules appear to have kickstarted a national conversation about leaseholders’ rights. It has emerged that, in recent years, leaseholders have paid hidden insurance commissions as part of their “service charge”.

Until these new rules came in, leaseholders had no say in the decisions that freeholders made regarding buildings insurance. It has emerged that certain freeholders may have agreed to pay higher premiums for cover, allowing brokers to receive larger service fees. In exchange, freeholders benefited from commissions in exchange for choosing this insurer.

The higher premium payments were passed on to leaseholders, who did not receive any added value. Worse, they often had no idea that such arrangements had taken place, and even if they were made aware, they would have no ability to influence any decisions.

2024 Class Action Lawsuit against Hidden Insurance Commissions

In July 2024, a class action lawsuit was launched against these “hidden insurance commissions”, which one solicitor described as a “national scandal”.

Such secret arrangements and underhand commissions would be in breach of the new FCA rules. The British Insurance Brokers’ Association has welcomed these reforms. They have also announced their plans to produce guidance for brokers to help them ensure that they value leaseholder interests alongside freeholder interests.

Paul Stenning, Divisional Director, Real Estate & Construction, James Hallam, said:

“These new rules should help to level the playing field in an area of insurance that has traditionally been exploited by certain parties. As a prudent specialist broker, we welcome these new rules and have embraced the rationale to ensure that our clients’ insurances are placed with an emphasis on a combination of breadth of cover, security of insurers, and fair and appropriate insurance premiums.

“Our advice to freeholders who may be concerned about their premiums is don’t be afraid to ask your broker or managing agent for disclosure of costs and fees as you are entitled to know exactly what your leaseholders’ premium payments go towards. And of course, don’t forget that you are within your rights to seek alternative quotes.”

Waiting For The Autumn Budget

Since the FCA introduced the new rules, the UK has elected a new Labour government. At the time of writing, the details of Chancellor Rachel Reeves’ Autumn Budget, and the implications it might have on the insurance industry, are unclear. However, there are concerns that the new government may look to raise insurance premium tax (IPT).

Biba has called on the new government to cut the headline rate of IPT from 12% to 10%. On top of this they have called for an IPT exemption for all multi-occupancy residential buildings that are either currently undergoing, or in need of, cladding remediation.

In a statement, Biba said: “We believe that IPT is a tax on the poor and vulnerable, and a tax on businesses at a time when we want them to invest more in risk management.”

Are You Struggling to Get Multi-Occupancy Building Insurance?

There have been concerns that, following these new FCA rules, insurers and brokers may leave the market, or else limit their cover options.

If you are a freeholder, and you have struggled to get multi-occupancy building insurance as a result, we can help you.

We are an independent Lloyd’s broker with a dedicated team of experienced insurance professionals. We are committed to getting you the cover you need at a price you can afford.

Talk to us, and we can help you ensure you have enough cover to protect your multi-occupancy property at a truly competitive price. We will also help you ensure you meet the new FCA regulations, and that your insurance meets your leaseholders needs, as well as your own.

Get in touch for a free quote today.

directors

10 Reasons Why Your Business Needs Directors & Officers (D&O) Insurance
10 Reasons Why Your Business Needs Directors & Officers (D&O) Insurance 750 422 James Hallam

What is Directors and Officers insurance?

Directors and Officers (D&O) insurance is a vital safeguard for businesses, protecting key decision-makers from personal liability in the event of legal claims related to their roles. In the UK, the responsibilities of directors and officers have increased significantly due to ever-evolving corporate governance standards and stricter regulations. Without D&O insurance, your business and its leaders may be exposed to serious financial and legal risks.

What Does D&O Insurance Cover?

D&O insurance provides essential protection, covering legal defence costs, settlements, and compensation in a wide range of scenarios. Ultimately, D&O insurance is not just a safety net—it’s a vital tool for protecting the individuals who make the critical decisions that drive your business forward. By investing in a D&O policy, you safeguard your leadership team, your business, and your future.

Who Needs D&O Insurance?

Whether your business is a start-up, an established corporation, or a non-profit, having the right D&O policy in place can help you attract top talent, navigate regulatory challenges, and focus on growth without fear of personal liability.

Here are ten compelling reasons why every UK business should consider D&O insurance.

  1. Protect your Business from Personal Liability

The primary reason to invest in D&O insurance is to shield directors and officers from personal liability. In the UK, if a director or officer is accused of wrongful acts such as breach of duty, mismanagement, or negligence, they can be personally sued. Unlike the business itself, which may have its own insurance, individuals in these roles are vulnerable to legal claims that could threaten their personal finances. D&O insurance provides protection by covering the legal costs and damages, ensuring that directors and officers aren’t held personally responsible for costs related to decisions made in good faith.

  1. Defence Against Claims by Employees

Employees can file claims against directors and officers for a variety of reasons, including unfair dismissal, harassment, discrimination, and breach of employment contract. Such cases can be highly damaging, both financially and reputationally. Even if a claim is unfounded, the legal fees alone can be substantial. D&O insurance covers legal defence costs, settlements, and compensation in employee-related disputes, protecting your leadership team from potentially crippling financial burdens.

  1. Regulatory Investigations and Fines

The UK has strict regulatory bodies, including the Financial Conduct Authority (FCA) and the Health and Safety Executive (HSE), which hold businesses and their leaders to high standards. Regulatory investigations can be complex, time-consuming, and expensive. If your business or its directors are accused of breaching regulations, D&O insurance can cover legal expenses and fines associated with regulatory investigations, reducing the financial strain on your business.

  1. Investor and Shareholder Lawsuits

Shareholders or investors may file lawsuits against directors and officers if they believe mismanagement has led to financial loss or a decline in the value of their shares. In the UK, these types of claims are becoming more common, particularly for public companies. A D&O policy covers legal defence and any potential settlements, ensuring that the personal finances of directors and officers are protected while enabling the company to manage the situation effectively.

  1. Mergers and Acquisitions (M&A) Risk

Mergers and acquisitions can be exciting growth opportunities for businesses, but they also bring significant legal risks. During an M&A process, decisions made by directors and officers are often scrutinised by shareholders, regulators, and even the media. If stakeholders feel that they were misled or that the deal wasn’t in their best interests, lawsuits can follow. D&O insurance is essential for protecting directors and officers involved in these high-stakes decisions, ensuring they’re covered in the event of legal disputes during or after the transaction.

  1. Cybersecurity and Data Breach Liability

With the rise of cybercrime and the increasing importance of data protection regulations like the UK’s Data Protection Act 2018 (which incorporates the principles of GDPR), directors and officers are increasingly being held accountable for cybersecurity failures. If your business suffers a data breach, directors could be personally sued for failing to implement adequate safeguards. D&O insurance can cover legal costs associated with such claims, helping to mitigate the financial fallout from a data breach.

  1. Insolvency and Bankruptcy Claims

If a business becomes insolvent or bankrupt, directors may be personally liable for claims of wrongful trading or mismanagement leading up to the financial collapse. In the UK, wrongful trading occurs when directors allow a company to continue operating while knowing it is insolvent. D&O insurance offers crucial protection by covering legal costs and potential damages arising from such claims, helping directors navigate the challenging process of insolvency without putting their personal assets at risk.

  1. Attract and Retain Top Talent

Top talent is often drawn to businesses that offer robust protection for their leaders. By providing D&O insurance, your business can demonstrate its commitment to safeguarding directors and officers from personal risk. This level of protection can be a key factor in attracting experienced professionals to your leadership team. Additionally, offering D&O insurance can help retain top talent by giving directors and officers peace of mind that they are protected in the event of a legal claim or regulatory investigation.

  1. Protection for Non-Profit Organisations

D&O insurance isn’t just for large corporations; it’s also crucial for non-profit organisations, charities, and community groups. While these organisations may not have the same level of financial exposure as big businesses, directors and officers are still responsible for managing the organisation’s finances, governance, and regulatory compliance. Without D&O insurance, directors and officers of non-profits are at risk of personal liability if they are accused of mismanagement or negligence. This protection is especially important given the limited financial resources many non-profits have at their disposal to cover legal costs.

  1. Claims Can Arise Even After Resignation

One often-overlooked benefit of D&O insurance is its ability to provide cover for claims that arise after a director or officer has resigned from their position. Legal actions can be filed long after an individual has stepped down, particularly if there are allegations of wrongful acts committed during their tenure. D&O insurance ensures that former directors and officers remain protected, giving them the confidence to make decisions without fear of lingering liability.

Why is Directors and Offices Insurance so Important?

In today’s complex business environment, the risks faced by directors and officers are higher than ever. From regulatory scrutiny and employee claims to cyberattacks and shareholder lawsuits, the potential for legal action is vast. Without D&O insurance, directors and officers are left exposed to personal liability, putting their financial security on the line for decisions made in the course of their duties.

What’s the Difference Between D&O Insurance and Management Liability Insurance?

In the UK, Directors and Officers (D&O) insurance and Management Liability Insurance (MLI) are similar but differ in scope. As detailed above, D&O insurance protects directors and officers against personal liability for claims made against them while performing their duties. In contrast, MLI is broader, covering not only directors and officers but also the company and senior management. It includes risks like employment practices liability (e.g., discrimination or wrongful termination). While D&O focuses on individual liability, MLI covers both individuals and the business entity against management-related risks. 

Talk to Us About D&O Insurance Today

Get in touch for a free quote today.

Start Typing