23rd August, 2022

We asked our team about current insurance trends and updates, and here’s what they had to say…

Over the past couple of years, huge changes in business have occurred—and they’re still changing rapidly. We asked our team about how the insurance landscape has been affected and what this means for you.

Corporate Travel

It’s no surprise we all want to resume doing business in person. We can vouch for this with the large volume of enquiries we’re getting for corporate travel insurance.

With most people ceasing travel cover back in 2020, there’s now a rush on securing new policies again. As you might expect, the cost of cover has increased. Clients are reinstating covers and expanding the coverage to include international travel again. We’re rigorous in dealing with competitive insurers who are proactive in keeping current with what’s happening, and with how market changes might affect your policy.

For example, in one instance a client was concerned they’d need to take out business and related travel covers for associated trips. We were able to secure them an all-in-one policy, thanks to our excellent insurers.

One of the key changes to travel cover is in policy wording, which now extends to include cover in the instance you come down with COVID-19. This means you’re protected against delays and restrictive transit points (depending on the airline—for instance, in the event you have it, you can’t transit through Dubai or Singapore).

Home & Contents Insurance

What you need to know about how home offices affect your home insurance policy.

Recently, the ABC published an article about insurers cancelling home insurance policies because of business activity being conducted at home.

On reading the headline and the top portion of the article, you’d be right to slip into mild panic. It suggests that people with side businesses could have their home insurance policies all wrong, leaving them without cover. Click to read the article here.

Towards the end, you’ll see where ASIC’s comments counter the sensationalist headlines, essentially saying that insurance companies could be seen to be misleading if they’re not asking the right questions of consumers when putting policies in place.

Since it was published, we’ve had calls from concerned clients, so we’d like to clarify a few things.

What constitutes a home office?

A home office only provides a service—there are no staff, no stock, or any client visits to the property, and it must fall within the Product Disclosure Statement acceptance depending on the underwriter.

For instances like food vans, taxi drivers and the like, if the car is parked in the home driveway only, but no business is conducted there, your home policy won’t be affected. Insurers who claim otherwise aren’t in line with legislation.

How does the home office affect home insurance policies?

Home policies exclude liability for business, including home offices. They also limit the sum insured for the contents of a home office used for earning an income.

Our simple message is this:  if you’re running a business from home you need to be mindful of it contravening your home policy, so contact your home insurer or broker to get clear on whether it is or not. Our take is that if you have a business, always insure your business for Property & Liability separately from your personal home policy. 

Self-managed Super Funds (SMSF) and Insurances

Ever been tempted to wear that investment Argyle diamond out for dinner? Or hang your investment art piece on a wall at home? Or even sneak away to holiday in your investment unit on the Gold Coast?

If you have, then don’t let temptation get the better of you—it could cost you dearly.

Many people who come to us don’t realise that anything acquired in a super fund must be insured in the name of the super fund and cannot be in their private name.

Domestic house policies only afford limited cover to you as an individual. We use specialist insurers that will cover works of art, jewellery, bullion etc. To protect fund assets in the event of a creditor dispute and prevent costly legal action to prove who owns them, assets should be recorded in a way that distinguishes them from your personal or business assets and clearly shows legal ownership by the fund.

Additionally, fund assets (other than money) should be held in the name of either the individual trustees ‘as trustees for’ the fund, or the corporate trustee ‘as trustee for’ the fund and need to be insured in this entity’s name.

Machinery and Equipment

We never saw price hikes of 30% for second-hand machinery coming, and it’s important you update your policy to reflect these new market values.

Though your purchase price was lower, limited supply of new equipment and the cost of repairs has risen. Your sums insured need to be updated otherwise it may be detrimental if something happens and your cover is inadequate for the new value of your equipment.

If you have a vehicle or machine that’s critical to your business, the insured value needs to be covered to the current market value.

Professional Indemnity

With the increase in ‘hard-to-place’ risk (such as engineers in construction and mining), it has become harder to get quotes for professional indemnity because many insurers are simply unable to provide new capacity or are declining to support specific industries.

Insurers have become extremely picky due to the restrictions in the market, causing reduced capacity to underwrite. Avoiding hard to place industries leaves subcontractors with a bit of a dilemma in securing insurance they can afford.

Our clients reap the benefits of our long-standing relationships with top insurers, which extends to being able to help those who are not in the upper realms of affordability. It’s just that it’s taking more time for us to place risks and negotiate than usual.

As always though, we’re looking after our clients in ‘hard-to-place’ scenarios, we never over-promise and take time to ensure changes and current market conditions are clear and understood.

Property Owner Risk

With the increases in office vacancies, we’re seeing insurers decline to offer policy renewals, particularly if they’re more than 50% vacant. Almost everyone now has a vacant unit, making it harder to get cover for unoccupied offices. With the base premium in specific cases reflecting over $10,000, it’s just not viable for most.

New businesses are mostly overlooked by insurers as a result, but this is where you can benefit from our negotiation power through the positive partnerships we’ve developed over the past 30 years. We’re able to leverage the more supportive insurers in securing cover for those harder-to-place risks.

While this is a snapshot of the currently changeable landscape, our team are a wealth of knowledge when it comes to staying abreast of underwriting appetites in this rapidly evolving market.

Talk with us directly on 1300 736 997.  Otherwise, feel free to jot your details here and we’ll be back in touch shortly.

Author: Chris Earle