What Type of Life Insurance Policy Should You Get

The primary purpose for getting life insurance will always be to protect the people you care about in case something were to happen to you. How much capital would you need in order to pay off debts, support your loved ones, or to take care of all your affairs?

After you understand what priorities you would like to protect through life insurance it is fairly easy to determine the correct amount of coverage.

What Type Of Life Insurance

The next question is what type of coverage will best serve your needs. In order to get the right amount of coverage you also have to make sure that the premiums fit comfortably into your budget.

Term Insurance Benefits

Term insurance is less expensive than whole life insurance, because you are renting the insurance. Your coverage is considered pure insurance in this case, because it doesn’t develop cash value or participate in company dividends.

Instead it allows you to get the right amount of protection for the least expensive premiums available. Term insurance has also developed over the years to offer more comprehensive options. You can get a return-of-premiums policy where you pay more during the life of the policy, but the insurance company refunds all of your premiums at the end of the fixed term.

There are also term policies that allow you to lock in your age and health for the remainder of your life, so that you can have the coverage and premiums locked in for the rest of your life. This is a great and inexpensive way to obtain permanent insurance.

How Long Should You Lock In Your Premiums

The longer you can lock in your premiums the more advantageous it will be in the long run. The insurance company takes into consideration the mortality risk during the level period of the term. If you are 35 and you get a level 20-term policy then the rates will be fixed until you are 55. And because you are locking in the premiums at a younger age, the average risk and rates will be less than if you were to lock in your premiums at 55.

Most people have an insurance need that will last throughout the rest of their lives. If you can permanently lock in a portion of your insurance at a younger age this can save you substantially on premiums. It happens quite often where people will have to apply for new coverage after the fixed rates on their current policy have expired, and because they are now older and have to pay much more in premiums.

Your health is also locked in when you first take the policy out. Many people looking for insurance in their fifties or sixties are dealing with some type of medical condition that makes the cost of life insurance double or triple in cost. The same logic that applies to locking in your age is also good to keep in mind when locking in your health. We don’t know what is going to happen to us, and if we have our insurance locked in then our insurability and premiums will be unaffected by a medical event.

Level Term Insurance

I always recommend getting a level-term policy as opposed to one that will start off lower and increase premiums each and every year. The level term policies allow you to lock in your age and health for the remainder of the term, whereas the increasing-premium policies become more expensive every year based on your new age.

Because term insurance is a less expensive way to get the right amount of protection, I believe that it is the right choice for a large majority of people looking at life insurance.

Cash Value Life Insurance: When To Consider It

First A Word Of Caution About How The Life Insurance Industry Operates

An agent who pushes one company above the others is doing his or her clients a disservice. Every company has its positives and negatives and each company has focused on certain demographics to try to create a competitive edge. There are 17 life insurance companies in the fortune 500 alone. These companies have very similar investment portfolios and conduct business in ways that are more common than not. Eight of these companies are mutual, nine are stock companies, and they all operate in order to make a profit. The most important thing that anybody can do is to have an agent who can help them shop the market for the company that is going to fit their needs best. Somebody that is a smoker with high blood pressure is going to have better options outside of the companies that target nonsmokers without health conditions. Finding the least expensive company on the market for your age and health can save you thousands of dollars.

I used to work for an insurance agency where we only sold a single triple-A-rated-insurance company. When I worked for this agency, my fellow agents and I were especially inculcated with the benefits of this company’s whole life insurance. This situation is not unique.

Captive agencies have managers that groom agents to push one company because they get paid commissions when their agents sell these products. Please don’t assume that life insurance agents are experts on the benefits of different companies and types of insurance plans, because many of them are unaware of the benefits beyond their own company. Instead of consulting their clients and shopping the market they push a single product that doesn’t always match up well. There are far too many people being given advice from agents to consider whole life insurance, because they are trained to present the same products to every client.

When You Are Considering An Insurance Company It Will Always Be Advantageous For Some People And Ill Advised For Others

If you sit down with an agent who goes over a list of benefits about a single insurance company, keep in mind that most benefits are really trade-offs. For instance, if a company is a triple-A rated insurance company than they are probably also more conservative with whom they insure. A triple-A rating is great, but it is really only necessary if you plan on participating in the companies dividends, or in other words buying their whole life insurance. There is no need to pay extra money for the privilege of having a triple-A rated company as many agents insist. A.M. Best considers a company with an A-rating to be in excellent financial health and there are many A-rated companies with less expensive insurance offers if you are not planning on participating in whole life.

When Whole Life Insurance is a Good Idea

For some people, whole life insurance can be a great complement to their financial security. I have sold whole life insurance based on the following benefits.
1) It has a guaranteed return that will consistently build up the cash value in the policy.
2) It gives policyholders permanent insurance so that they are insured throughout their lifetime.
3) It allows them to stop paying premiums after a certain number of years, because the dividends from the company will be enough to keep the policy in force.
4) It allows policyholders to take cash from the policy in the form of a loan, so that you have another option if liquidity is needed.
5) The growth of the policy is tax deferred and tax-free as long as long as the policy is kept in force.

The problem can be that many of these benefits point to life insurance as an asset or investment. Life insurance should always be considered for the death benefit first and foremost. If you have already maxed out both your Roth Ira and 401(k), have at least three months of expenses in accessible savings, and are looking for something else to build up savings then whole-life insurance can be a good option. The point is that whole life insurance is a good choice when you have the ability to max out your qualified retirement funds and are looking to complement your savings with a conservative tie in to your life insurance.

Whole life can be a mistake for a couple of reasons

There are risks when putting your money into whole life insurance. The risks aren’t always clearly explained, because the agents focus on the guaranteed dividends that will grow the cash value every year. However, one significant risk is buying into whole-life insurance, paying the premiums for a number of years, and then not being able to keep up with the premiums down the road. Life insurance companies bank on this happening to a certain percentage of policyholders.
If this occurs you are in danger of losing thousands of dollars in paid premiums without the benefit of accumulating any cash value. When a policy lapses or you can’t keep up with whole life premiums then the insurance company will retain your premiums without you having any cash value built up or any insurance in force.
These whole life polices are structured to have large front end expenses and it will take at least a couple of years before your premiums start to build up cash value. It takes about ten years before the amount of premiums you put into the policy will equal the cash value in the policy.

How Cash Value In Whole Life Insurance Works

The other risk with whole life insurance is not understanding how the cash value in the policy works and taking out too much of it. The cash value in the policy is liquid, but the insurance company will let you take out about 97% of it in order to protect against the policy lapsing. Any cash that is taken out of the policy is loaned from the policy at interest.

Lets assume that you are in the first 20 years of your whole life policy and are taking a loan from the cash value in the policy. The loaned interest rate is 8.0 %, the non-loaned dividend interest rate is 6.85%, and the loaned-dividend interest is rate is 7.9 %. Notice that the insurance company steps up the interest rate on the loaned amount or the amount borrowed from your cash value. This mitigates the cost of the loan, but the loan still creates an ongoing obligation to pay interest. For instance the cost of borrowing here would be 6.95 %.

(The loaned interest rate (8.0 %) + (the non-loaned dividend interest rate (6.85%) – the loaned-dividend interest rate (7.9%)) = cost of borrowing (6.95%).

The cash value in the policy is really a double-edged sword, because it leads to a significant risk that you will not be able to keep up with the premiums. It is practically intended for people who can repay the loan quickly so that the policy continues to develop dividends instead of an obligation to pay interest. It is great for people who aren’t ever tempted to borrow from the policy, because the dividends will compound and eventually be able to cover the cost of annual premiums. When this occurs the risk of lapsing will be negligible. However, this takes quite some time to achieve and it truly depends on how disciplined you can afford to be with the additional cost of these premiums. If you would rather have control of your money up front there is an argument that you can buy term and invest the rest instead of leveraging the insurance companies general fund.

Your Personality Profile And Budget Must Be In Line

I recommend taking a look at both your budget and how much control you want over your money for at least the next ten years if you are considering whole life. Because term insurance can now permanently lock in your age and health in the same manner as whole life insurance, the biggest question is whether or not you want control over investing the difference in premiums. Many people prefer whole life insurance because they don’t have to think about investing the difference; the insurance company does it for them. They can also grow their death benefit by the amount of growth in cash value and act as their own creditor if they ever want to borrow cash from the policy.

A Couple Other Points About Whole Life Insurance

The cash value component in a whole life insurance policy needs to be addressed. The first is that cash value is based on compounding dividends. So the longer you keep the paying premiums the more advantageous it is. The second is that if you go with a reliable insurance company they will usually pay non-guaranteed dividends that are based on the results of an insurance companies investments. This is when rating is important to consider, because you are now participating in these dividends. Also if you have allowed the cash value to grow and take out modest loans from the policy later in life, you will most likely have enough in dividends to keep pace beyond the ongoing obligation of interest. However if you do surrender the policy the gains will be taxed as capital gains and you will have to pay a surrender charge as well. If the policy is in force and you pass away while there are still outstanding loans, the death benefit will be paid out after it covers the cost of the loans that you have taken from the policy.

Term Insurance Vs. Whole Life

I believe the most important factor in all of this is the human element. If you are patient, conservative, and comfortably able to continue paying premiums without the temptation to borrow from the cash-value then you are a good candidate for whole life insurance. The majority of people have fluctuating budgets and circumstances where they are better off with something that locks in their age and health and gives them the opportunity to invest the difference elsewhere.

Student Car Loans Now Made Easy

Every young American student who is eligible for a valid driving license feels the need to own his or her own car. And in a way there need is justified, between college tuitions, home and part time jobs they are the ones who need an automobile the most. Most of the banks and credit unions are very wary of providing college student car loans, mainly because students have low income capacity. Even if they agree they may insist on a guarantor or a co signor for your loan, which may not be an option for everyone.

Online car loans for college going students

However in this modern era the advent of numerous online car finance companies have come as a boon for students. They have specially designed car loans for students with no credit. And these online car financing companies are not in a limited number. A few clicks on the internet search engines and you will be able to see a plethora websites that deals in online car financing for college students. Hence do not settle for auto finance deal until you have compared loan terms for your category in these sites. Some of the websites also functions as brokers allowing you to compare deals offered to you by various lending companies.

Car loans are usually fully secured loans, where in the car it is held as security by the lending organization. This is until you have paid your last due installment. So that if you default on your payments and are not able to pay back these loans then they will take possession of the car. Student car loans are no credit type financing as normally most students would not have taken part in credit transactions that are tracked by credit rating agencies. Hence it is advisable that they take the repayment of these loans seriously. This loan can be a stepping stone in building a secure financial future by starting to create a new positive credit history. But this can only be possible if they pay their installments on time without defaulting. If they do not, they face the ignominy of starting their credit history on a very negative note, where in future lenders would be very weary to give you any sort of financing services.

So students need to make an honest introspection and evaluation of kind of vehicle they need and can afford. Because there are other costs too involved with owning a car. Apart from the principal and the interest amount the student also has to pay for insurance; gas (it is advisable to choose the most fuel efficient one among the available options) and other maintenance cost (like servicing charges, oil change cost etc.). So be prudent and make a smart decision.

There are in point of fact some good advantages of college student car loans. Firstly if you pay off the car loan payments on time it will replicate positively on your credit score ratings. Credit agencies all the time look to see if you have taken out loans over the itinerary of your credit history. It is not easy for university students to get a student car loans with tight finances, but now many online lenders like www.carmoneyfast.com are offering student car financing at very affordable interest rate. Now students can get pre approved financing for car despite bad credit.

Over 40 Ways to Decrease Your Auto Insurance Costs

There are multiple articles titled “7 ways to save on car insurance” or “5 Tips to lower your auto insurance costs” etc, but would it not be great to have all those saving tricks and discounts at one place? Below you will find such a list for Auto insurance. This list is a comprehensive overview of all opportunities to save on car insurance in Canada, and was compiled based on the results of numerous discussions with insurance brokers and through analyses of different insurance offerings.

1. Shop around: Search, Compare, and switch insurance companies. There are many insurance providers and their price offerings for the same policies can be very different, therefore use multiple online tools and talk to several brokers since each will cover a limited number of insurance companies.

2. Bundle: Do you need Home and Auto Insurance? Most companies will offer you a discount if you bundle them together.

3. Professional Membership: Are you a member of a professional organization (e.g. Certified Management Accountants of Canada or The Air Canada Pilots Association)? Then some insurance companies offer you a discount.

4. Students: Being a student alone can result in a student discount.

5. Alumni: Graduates from certain Canadian universities ( e.g University of Toronto, McGill University) might be eligible for a discount at certain Insurance providers.

6. Employee / Union members: Some companies offer discounts to union members.

7. Seniors: Many companies offer special pricing to seniors.

8. Direct insurers: Have you always dealt with insurance brokers / agents? Getting a policy from a direct insurer (i.e. insurers working via call-center or online) often can be cheaper (but not always) since they do not pay an agent/broker commission for each policy sold.

9. Annual vs. monthly payments: In comparison to monthly payments, annual payments save insurers administrative costs (e.g. sending bills) and therefore they reward you lower premiums.

10. Loyalty: Staying with one insurer longer can sometimes result in a long-term policy holder discount.

11. Annual review: Review your policies and coverage every year, since new discounts could apply to your new life situation if it has changed.

12. Welcome discount: Some insurers offer a so called welcome discount.

13. Benchmark your costs: Knowing how much other consumers similar to you pay for their insurance can help you identify the most cost-friendly insurance providers.

14. Car Insurance Deductibles: Increase your car insurance deductibles if you believe that you are capable of incurring higher payments for damages in case of an accident. This is especially suited for more experienced car drivers.

15. Being a second driver: Driving a car only occasionally? Become a second drive instead of being a principal driver

16. Minimal coverage: Driving an old car without large value? Get a minimal coverage required by law (mainly liability) w/o collision damage (you are still protected if you damage somebody’s car but damages on your car will not be covered)

17. Minimal Coverage: Driving an old, inexpensive car? Then only get a minimal coverage plan which is required by the law (mainly liability) without collision damage coverage (does not cover damage costs for your vehicle)

18. Leverage your Credit Card: Check if your credit card insurance includes rental car protection. Paying with a card that has insurance for rental car protection can you save you around $20 per day in Collision Damage Waiver fees.

19. Leverage rental car coverage: If you frequently rent cars and have an auto insurance policy, you should check if your own auto insurance policy actually covers the rental car. If it is the case, you can save on all Collision Damage Waiver costs for rental vehicles.

20. Rental car rider: If your existing auto insurance policy does not cover your rental car, you can often add it as a rider (policy extension) for $20-30 dollars a year. Compared to $20/day you would pay when renting a car, it’s not a bad deal!

21. Location, location, location: Car insurance costs are different from one province to another (e.g. moving from Ontario to Quebec will surely reduce your insurance costs by half). If you move within a province, you should check for any changes in car insurance costs, and ideally you should move to where costs are lower (e.g. Burlington, Ontario has one of the highest car insurance rates in Ontario)

22. CAA member: CAA Members: Are you a member of the CAA? Some insurance providers will reward you with lower insurance premiums, including, of course, the CAA.

23. Dashboard camera: Get a dashboard camera for your vehicle. Even though installing a dashboard camera does not result in direct savings (insurance companies do not offer any insurance discount related to dashboard cameras) but it can prove you not-at-fault when it is the case in an accident. It results in you avoiding unfair premium raises.

24. Driving Course: Successfully completing a driving course is sometimes recognized by some insurance providers and could help you reduce your premiums.

25. Improving your driving record: Do you have a bad driving record? Every three years previously incurred tickets are removed from your insurance history and your insurance premiums can go down.

26. At-Fault Accidents: Have you been in a couple of accidents in the past where you were at fault? With a little patience (six years with no accidents), your risk profile will improve allowing you to once again enjoy reasonable insurance premium rates.

27. Age: Senior drivers enjoy lower auto insurance premiums. Thus in several years your premiums can go down.

28. Car Make and Model: Wisely choose your car, as some car models are more susceptible to theft or even have a history of more risky drivers (e.g. Toyota Camry, Acura MDX, Toyota RAV4, and Honda Civic are usually quite expensive to insure)

29. Good Student: Yes, having good grades can have many positive impacts, and even on your auto insurance rates! E.g. one insurance company rewards students who are younger than 25 and have good grades (grade average of B or higher) with a discount up to 25%.

30. Multiple-cars-bundle: Bundle several cars on one policy and your rate can go down

31. Anti-theft system: Installing a certified anti-theft system in your car results in a lower risk of theft and thus can lead to insurance discounts.

32. Winter Tires: Having winter tires is important for driving safety during the winter, but can also help reduce your insurance premiums.

33. Repair costs: Choose a car that would cost less to repair in case of damage. The repair costs for certain cars (e.g. Mini Cooper or BMW) are higher than other (e.g. Ford Focus) and insurance providers are aware of that.

34. Claim History: Keeping a clean claims history can sometimes be more financially feasible than submitting claims for small damage repairs which could result in increased premiums. Contacting an insurance provider/broker could help you find out what makes sense.

35. Being married: In most provinces your marital status affects your insurance premiums (except in Nova Scotia)

36. Short distance to work: Finding a house close to your place of work reduces the distance that you need drive daily to work and thus results in lower insurance premiums.

38. Drop glass coverage: For cars with inexpensive windshields, it can be more economical to drop the glass coverage since in combination with the deductibles to be paid in case of an accident you’d pay more. It is up to you to calculate.

39. Retiree Discounts: Some insurance companies will offer different retirement discounts for drivers.

40. Disabilities: Some companies offer discounts for people with disabilities.

41. Hybrid vehicles: Many companies award driving a hybrid vehicle with lower insurance premiums.

42. Private Garage: Parking your car in a safe location (e.g. private or secure garage) normally results in lower insurance premiums with auto insurance providers.

Car Loans After Bankruptcy Made Easier

Car loans after bankruptcy can be a little more difficult than your previous loan you may have applied for before your financial downfall. This does not mean that it is impossible to get a loan. Now there is good news for those looking for a new car after bankruptcy. Getting car loans after bankruptcy is more likely today for those who find themselves in these circumstances.

There are a few things that you can do to help you get the approval you need for a car loan. Let’s explore a few steps you can take to make car loans after bankruptcy easier.

Begin by double-checking your credit history reports. Pull your credit reports from Equifax, Transunion and Experian and go through them with a fine tooth comb to be sure that all debts that were to be removed in the bankruptcy are no longer on the reports. Sometimes, the bureaus can miss taking off a debt that has actually been discharged through your bankruptcy and this can lower your credit score more than it should.

You may want to draft up a letter to send to each of the three credit bureaus explaining the reasons for filing bankruptcy. If you had a setback due to a divorce, extreme medical bills or a temporary loss of job, this letter could give you a better chance at getting lower interest rates. Potential lenders will be able to read the explanation and may take this into consideration when deciding to grant you a car loan after bankruptcy. In addition, feel free to explain the steps you have taken to begin to rebuild your FICO score.

After reviewing your credit reports the next step would be to take a good hard look at your current finances. Evaluate the monthly payment you can realistically handle for a car loan along with all your other financial obligations. Don’t forget to allow for insurance and maintenance. Do your best to choose a car that will help you stay on track and make your monthly payments on time. Paying your car payment on or before the due date is the quickest way to rebuild your credit history.

Once you have successfully paid the car loan for a year, chances are good that you will have the opportunity to refinance with a lower interest rate. Make a note to yourself to recheck your credit score after the first year and begin to look for refinancing at that point. This could save you money over the balance of the car loan after bankruptcy.

And, finally research a car dealership or auto broker that has expertise in finding car loans after bankruptcy. Some dealerships and brokers have special finance departments. Because of the volume of special loans they secure, these experts can typically find you lower interest rates. And, this will make your monthly payments lower. With the lower monthly payments you will have a better chance to regain your financial borrowing power and improve your overall credit history.

A Guide to Business Insurance for UK Marine Trades

Introduction

Insurance solutions for businesses operating in the Marine Leisure Sector have been slow to evolve compared to other sectors. Until relatively recently, a boatyard owner could find him/herself having to source a suite of insurance products to cover buildings, contents, financial risks, vessels, pontoons and indemnity against a range of legal liabilities. Whilst the first Marine Traders “Combined” policy that provided cover for all these risks appeared in the late 1990s, the market did not rush to embrace the new paradigm. Some significant providers of insurance in this Sector did not release a “Combined” solution until as late as 2007 and others still only offer stand-alone covers.

Advantages of Combined Insurance Policies

There are numerous advantages to business owners of having a single insurance policy that combines cover in respect of the majority of their needs. First and foremost it streamlines administrative processes by reducing documentation considerably, thus saving business owners time and money. It also ensures the owner has a single renewal date to deal with. Probably the main benefit to businesses is the potential premium savings that can be made through this type of system: the more cover that can be placed on a single policy gives the provider more scope to reduce the overall insurance premium.

Marine Trades Insurance Providers

Combined Insurance policies for marine-related businesses are now available from a number of specialist providers. Whilst the majority of these providers will deal direct with the public, some will deal only through insurance brokers. An insurance provider that sells direct to the public will only offer their own product. Dealing directly with insurers not only restricts you in terms of available insurance options, it also means you have to invest valuable time in shopping around providers for competitive quotations. An independent specialist Marine Trades Insurance broker can potentially save you and your business time and money by conducting a full broking exercise across the market on your behalf.

Specialist brokers can also assist in arranging bespoke cover as opposed to a standard “off-the-peg” solution. This can give your business vital benefits where standard policy exclusions are amended or removed, widening the overall scope of protection. You may also benefit in the event of a claim:

  • Where a business buys direct from an insurer, in the event of a claim the owner is left to negotiate a settlement from the insurer. This can put the business at a disadvantage where there is a dispute over liability or settlement. Using an independent specialist broker to arrange cover provides the business owner with an experienced advocate in the event of suffering a claim. The broker is bound to act in the best interests of the client at all times and a specialist broker can often assist in instances where claims have initially been repudiated.

Structure of Marine Combined Insurance Policies

Before outlining the structure of a policy it is necessary to stress the importance of ensuring that the correct limits of indemnity form the basis of your insurance cover. It is tempting for businesses seeking to reduce their costs to deliberately underinsure their businesses. This can potentially prove catastrophic in the event of a loss, as an insurer will almost certainly invoke the principle of “Average” when underinsurance is discovered.

  • The Principle of Average: In the event of underinsurance any claim settlement will be based on the ratio of the sum insured to actual value. For example, where a business has insured stock worth £100,000 for only £50,000, the business has underinsured by 50%. In the event of a loss of £25,000, the insurer will apply average and only pay a settlement of £12,500.

The example above underlines the importance for businesses to establish the correct basis of cover with their provider and then negotiate a competitive premium. An independent specialist broker with access to a number of alternative markets will help you obtain the right solution at the best available premium.

Marine Trades Combined Insurance policies generally follow the same model, with the odd exception as to where a particular item may appear. For example, some policies will include pontoons in the Material Damage Section whilst others may bracket them in the Marine Section. Outlined below is a typical policy structure:

  • Material Damage: This Section will cover all property other than vessels at your business premises. It is split into various sub-sections that vary from provider to provider, but the splitting of property into these sub-sections enables you to benefit from lower premium rates on the lower risk items to be covered. Typically, a Material Damage Section will be divided as follows:

  • Buildings (with or without subsidence cover)
  • Marine Installations (pontoons, slipways, wet/dry docks etc)
  • Computers and Associated Equipment (at the business’ premises)
  • Machinery and Equipment (at the business’ premises)
  • General Stock (at the business’ premises)
  • Valuable & Attractive Stock (at the business’ premises)
  • All Other Contents (at the business’ premises)
  • Glass: Some insurers will include Glass within the cover for Buildings. However, most Marine Trade insurers will not cover Glass unless specifically requested and will also levy an additional premium. Cover will be provided for external and internal glass with additional extensions available for items such as glass signage and sanitary ware.

  • All Risks Cover: Must be obtained for businesses wishing to insure items they remove from the business’ premises such as:
  • Tools & Machinery
  • Laptop Computers, Mobile ‘Phones etc
  • Trailers (thease can also be covered under the Marine Section)
  • Frozen Food: Covers loss or damage to fuel resulting from change in temperature in fridges or freezers resulting from breakdown or interruption to power supply.

  • Goods in Transit: Protects against loss of goods whilst in transit or whilst temporarily stored in the course of transit. Business owners need to beware of the variation in scope of cover from policy to policy and of the plethora of exclusions that each insurer applies to cover.

  • The premium for Goods in Transit insurance is based on a combination of the total sum insured per vehicle, the number of vehicles used and the estimated total annual carryings of the business.

  • This Section can also be extended to insure postal sendings and carriage by third parties.

  • Goods in Transit cover for vessels is excluded on many policies unless specifically mentioned. However, it is possible to include insurance for vessels whilst in transit by endorsing the Marine Section of the policy. Organising a policy in this way can save a business money if vessels are the only items to be insured whilst in transit.

  • Exhibitions: Covers exhibits, stands and other materials at exhibitions.

  • Whilst insurers include this Section within their policies, a business could reduce costs by having the Marine Section of their policy endorsed to cover vessels at exhibitions rather than pay their insurers an additional premium for the same benefit.

  • Business Interruption: Covers the loss of Gross Profit and/or the Additional Cost of Working in the event of the trading activities of a business being interrupted by an insured peril, such as fire or flood. Extensions can be purchased to cover losses arising from perils such as:

  • Breach of Canal
  • Damage in the vicinity of Premises or to Contract or Exhibition Sites
  • Denial of Access to the vicinity of Premises
  • Damage to Moulds, Patterns, Jigs, Dies, Tools, Plans, Designs, etc
  • Loss or Damage to Property stored in locations other than own premises
  • Loss or Damage to Property in Transit
  • Damage to Premises of Suppliers or Customers
  • Loss of Utilities
  • Disease & Illness

  • Just as it is essential to insure property on the correct basis to avoid insurers applying “Average” in the event of a claim, it is vital to ensure the correct level of Gross Profit is used to determine Business Interruption cover.

  • The definition of Gross Profit in insurance terminology differs from that of accountancy. A business should always check with its provider as to the exact terms of their Business Interruption policy but the procedure below provides a general system that should fit most insurers’ methodology:

  • Obtain the income statement for the last full operating month and locate the net profit amount.
  • Employers Liability Tracing Office

  • Review each individual expense line item on the income statement to identify costs of operation that are not directly related to production, also referred to as “standing charges.” For example, office rent is due whether the business is in operation or not, and the price does not fluctuate based on production, whereas some worker salaries (such as casual, seasonal labour) would cease when trading is interrupted.
  • Employers Liability Tracing Office

  • Add each standing expense identified in Step 2 to the net profit obtained in Step 1 to obtain gross profit, or the company’s loss from lack of operations.

  • Money: Provides insurance for cash, cheques etc whilst on premises, in transit or in bank night safes. Some policies will also provide extensions for money in directors’ homes and at exhibition or contract sites. Policies will usually provide a Personal Accident extension that offers nominal sums in the event of Death or Disability arising from assault during attempted robbery or theft.

  • Defective Title of Vessels: Reimburses the purchase price of a vessel bought or sold by a business in the event of the true owner of the vessel reclaiming it (or its value). It will also provide indemnity where a business has a valid claim brought against it as a result of being unable to provide good title for the vessel.

  • Employers Liability: It is a statutory requirement for all businesses to carry Employers Liability Insurance where they employ people be it on a paid or voluntary basis. It indemnifies the business in respect of its liabilities arising from death, injury or illness to its employees

  • Premium is based on the total annual wages of the business. Each occupation within a business’ workforce will attract its own premium rating based on the perceived hazards associated with that particular occupation. A rigger, for example, will attract a higher premium rating than an employee engaged in light yard work.

  • You should ensure you accurately declare your annual wageroll to insurers. Deliberately under-declaring could be construed as failing to disclose a material fact and may result in a claim being repudiated.

  • Labour only sub-contractors should be treated as Employees as far as insurance is concerned. Generally they work under the direction of the Insured and do not provide their own materials or tools (with the exception of small hand tools). Cover would therefore be arranged for such individuals by the hiring business under the Employers Liability Section of their policy.

  • There is a requirement that businesses must confirm their Employers Reference Number (ERN) or as it is commonly known Employers PAYE Reference to the insurer covering the Employers Liability which is recorded centrally with the Employers Liability Tracing Office (ELTO). This is to ensure that the correct insurer can be identified where claims are submitted by an individual, which can be years after their employment has ceased. It is not unusual, for example, for certain diseases or conditions such as respiratory disease, industrial deafness or repetitive strain injury to take many years to manifest.

  • The ERN is the unique reference which attaches to a business and does not change which means that it will identify the correct employer and then the insurer for any given time period from 2011 onwards.

  • Public Liability: Indemnifies your legal liabilities to third parties arising from your business activities that result in death or injury to any person or loss of or damage to property. The insurance only attaches to those activities disclosed to your insurer and noted on your schedule so it is essential that a full description of all your business activities is provided.

  • Premium is based on the estimated annual turnover of the business. Each activity will attract its own premium rating based on the perceived hazards associated with that particular activity. Paint Spraying, for example, will attract a higher premium rating than Chandlery Sales.
  • You should ensure you accurately declare your annual turnover. Deliberately under-declaring could be construed as failing to disclose a material fact and may result in a claim being repudiated.

  • Exclusions and Extensions to Public Liability Insurance vary from insurer to insurer. For example, some policies will automatically provide Yachtyard Liability Insurance as a standard extension to their Public Liability cover. Others will charge an additional premium for Yachtyard Liability.

  • Liability in respect of hiring-in of cranes is normally excluded on most Marine Trade policies unless specifically requested. The additional premium for this cover is based on your estimated annual hiring-in costs. Standard cover is usually £100,000 which may not be adequate to replace the crane you hire. Find out what your exposures are and get your cover topped-up if necessary.

  • Yachtyard Liability: Protects your liabilities in respect of moving vessels on water for reasons such as testing, demonstration and deliveries. Like most policy sections, scope of cover will vary from insurer to insurer. For example, policies will restrict your permitted range, but distance you are permitted will vary greatly.

  • Not all insurers provide this cover under the “Yachtyard Liability” heading. Some insurers will provide “General Liability” that will automatically encompass the Yachtyard Liability element of other policies.

  • Products Liability: Insures your legal liabilities in respect of the products you manufacture and/or supply.

  • Whether you are manufacturing or distributing (wholesale or retail), you need to make sure the products you supply are safe. Failing to meet your responsibilities can have serious consequences. You could face legal action with possible fines or even imprisonment. You could also be sued by anyone who has been injured or has suffered damage to personal property as a result of using your product.

  • Products Efficacy Insurance: Designed to cover the failure of an item to perform its intended function Efficacy Insurance is often excluded from the Public & Products Liability Sections of Marine Trade policies. If your business is involved in the manufacture, supply or installation of performance critical products you need to check with your insurance provider to ensure you and your business have the right scope of Liability Insurance.

  • Marine Risks: Non-Marine Commercial policies have virtually no insurance provision for vessels. They are specifically excluded, with the odd exception such as rowing boats. The Marine Section of a specialist Trader’s policy is divide into 3 distinct parts:

  • 1. Vessels: This part of the Marine Section will cover all vessels not undergoing construction and includes Stock Vessels, Work Boats, your Private Craft and Charter Vessels. It can also be extended to cover other types of Marine Stock such as engines and parts.

  • Sums Insured for vessels are usually determined on an “Agreed Value” basis. This can be the price you paid for the vessel plus the cost of any improvements, or it can be a depreciated or written-down value.

  • The cruising range of your vessels will be clearly defined in this Section of your policy. You should check to ensure that you and your hirers are actually insured to sail or cruise to your intended destinations. For example, an insurer may assume that, if you are based on the Thames, you are only on the non-tidal stretch and will endorse your policy for”Inland Waterways” use only.

  • The are several extensions that can be purchased for this part of your policy such as:

  • Social use of vessels by Directors, Employees, Family Members.
  • Racing Risks (Sails, Masts, Spars & Rigging).
  • Water Skiing, Towing of Toys.
  • Angling and/or Diving Parties.
  • Personal Possessions

  • Exclusions in respect of vessels will vary from policy to policy. You should ask your provider to go over any exclusions with you in detail in case you require a special endorsement or extension.

  • 2. Builders Risks: Whilst scope and definitions may differ from one insurer to another, Builders Risks insurance will usually cover your vessel at the yard or dock where it is being constructed, including the yard or premises of a subcontractor. It may also cover the vessel whilst in transit between your yard and your subcontractor’s yard. Extensions can also be obtained to cover:

  • Movement of the vessel on water around the dock where it is being built.
  • Sea Trials
  • Delivery voyages under own power
  • If the vessel in build is being towed on the water a special extension is usually required to insure this activity.

  • The premium for this Section is based on a combination of the maximum completion value of an in-build vessel and the maximum value of vessels in-build at any one time.

  • 3. Marine Third Party Liability: This insurance is an extension of the Vessels Section and covers your legal liabilities in respect of your interest in or use of your vessels by your skipper and crew. The usual limit of indemnity provided is £3,000,000 but higher levels of cover can be purchased where required.

Policy Conditions, Exclusions and Warranties

As detailed above, policy conditions and exclusions will vary from insurer to insurer. Even if you are purchasing your policy by telephone you should always ask your provider to go through them with you in addition to any warranties that will have been imposed. There are significant differences between each of these:

  • Conditions: Policy conditions basically set out a code of conduct you’re your business and also outline duties and obligations required for cover to be in effect. If policy conditions are not met, the insurer can deny a claim specific to that condition.

  • Eg. A theft from a business premises is discovered and not reported to the insurer for a month. If there is a policy condition that all losses must be reported within 7 days, the insurer could refuse to pay the claim.

  • Exclusions: An exclusion actually removes cover from the insurance policy.

  • Eg. Boats are excluded from the Goods in Transit Section of a Marine Trades Policy unless an endorsement is put into effect.

  • Warranties: A policy warranty is an instruction by the insurer that must be carried out by the insured. For example, the business may be warranted to work on vessels worth no more than £500,000. In such a case, if the business worked on a more valuable vessel then it would be in breach of warranty.

  • The breach of a warranty by a business would enable an insurer to void the whole policy. In the above example, if the business owner suffered a theft of outboard engines, the insurer could void the policy on the grounds that the business had breached a warranty – even though that warranty was totally unrelated to the theft.

  • As you can see, warranties can potentially have a huge impact on your business. You should ensure your insurance provider goes through each warranty with you and explains what it means. Insurers can impose a warranty for just about anything – some common examples are below (the list is by no means comprehensive):

  • Compliance with Flammable Liquids & LPG Regulations.
  • No paint or GRP Spraying.
  • Automatic fire alarms to be tested weekly.
  • Fire extinguishers to be professionally inspected annually.
  • Fireproof doors to remain closed during working hours.
  • All stock to be kept at least 15cm off floor
  • Waste & dirty cloths to be kept in metal bins.
  • Waste bins to be kept outside premises out of working hours.
  • Intruder alarm to be set whenever premises is unoccupied.
  • Electrical circuits to be inspected within 30 days of policy inception.
  • Cash registers to be left empty & open when premises closed.
  • Vehicles to be fitted with immobilisers and alarms.
  • Premises to be inspected daily.
  • No artificial heating to be used on premises.
  • Machinery only to be running when premises is occupied.
  • No flammable liquids to be kept on premises.
  • Moorings to be lifted & inspected at least annually.
  • Terms of trade to incorporate BMF Terms of Business.
  • No work carried out on commercial vessels
  • Trailers to be secured with a wheelclamp whilst unattended.
  • Vessel not be let out for hire or reward.
  • Vessel will not tow or be towed

  • British Marine Federation (BMF) Terms of Business

  • Most Marine Trade policies warrant that you operate under BMF Terms of Business. You do not have to be a member of the BMF to use their terms. The essential point from an insurance aspect is that you ensure all your customers insure their own boats. This is a crucial factor that defines the mechanics of how your Public Liability insurance works and how it differs from non-Marine commercial insurance policies.

  • If you have a customer’s boat, outboard etc in your custody or control and it is lost or damaged due to your negligence, your legal liabilities in respect of the property are covered under the Public Liability Section of your Marine Trade policy.

  • This cover would not be provided on a non-Marine policy as legal liability in respect of goods in custody or control is specifically excluded. To insure these items you would have to procure specific insurance which, as leisurecraft and associated equipment are very expensive, would be financially prohibitive for a business to purchase.

Other Insurances for your Marine Trades Insurance Programme

Directors & Officers Liability Insurance (Management Protection)

Modern legislation now means company directors can now be sued as individuals in respect of their decisions and actions as directors or managers of businesses. The duties of company directors are established in law and include the following areas of responsibility:

  • Duty of Care: Directors are required to act with ‘the care an ordinary man would take in the same circumstances on his own behalf’ and with the skill expected from someone with his ‘particular knowledge and experience’. Where duties are delegated the Director is responsible for ensuring that the person to whom the duties are delegated is sufficiently experienced, reliable and honest.

  • Fiduciary Duty: Directors must act honestly, in good faith and in the best interest of the company and must ensure they do not have any conflict of interest.

  • Statutory Duty: Company directors are legally bound by legislation such as the Companies Act 1985, Insolvency Act 1986, Financial Services Act 1986, Environmental Protection Act 1990, Health and Safety at Work Act 1974.

How Can Claims Arise?

Whilst public bodies such as the Health & Safety Executive can prosecute directors if they are perceived to have failed to comply with their statutory duties, claims could also arise from numerous third parties such as employees, creditors, customers or suppliers.

With the number of employees injured at work increasing by over 100,000 in 2010 and lawyers able to act on a “No-Win, No-Fee” basis, directors appear to be more exposed than ever.

What Are The Financial Implications of a Claim? Directors will be personally liable for meeting the cost of legal expenses as well as any damages awards, fines or penalties. This means assets such as their cars, houses, stocks and money could be lost. Companies are prohibited from indemnifying their directors in the event of their insolvency.

How Can Directors & Officers Liability Insurance Help?

Whilst a D&O policy will not cover any fines against directors it will cover the cost of defending a prosecution until the point when guilt is established. This could potentially save tens, if not hundreds, of thousands of pounds of an individual’s assets in legal expenses. A D&O policy can also cover awards for damages and legal expenses made against directors in civil cases.

Professional Indemnity Insurance

If you give advice, conduct surveys or inspections for a fee, your legal liabilities in respect of these activities are excluded on your Marine Trade policy. A stand-alone Professional Indemnity policy will fill the gap in your insurance cover.

Tractor & “Special Types” Insurance

Tractors and other special type vehicles which are road-registered are excluded from standard public liability policies, as are many unregistered vehicles, if travelling on, or crossing, public highways. This may also apply to areas where the public have access such as ports, harbours and boatyards. Types of vehicles that fit into this class are: Tractors, Cranes, Fork Lifts, Cherrypickers, Boat Lifts and other self-propelled mobile plant.

Third Party insurance is compulsory and a failure to have this basic cover is considered one of the most serious offences. A substantial fine and disqualification are amongst the recommended penalties.

Driving uninsured (or allowing your employees to do so) is an absolute offence which means there is no discretionary defence available, ie the vehicle is either insured or it is not. If, for any reason it is not insured, the offence is committed.

Without insurance your business and your personal assets are at risk from potentially huge compensation claims being made against you

Comprehensive Road Risks insurance in for tractors and “Special Types” is available at very competitive rates from your specialist broker.

Summary

Modern businesses need modern insurance programmes. Cutting cover to cut costs is not the solution. Your 9-point step to getting the right cover for your business at the best available premium is:

1. Choose an independent specialist broker.

2. Ask them what they can offer you in terms of support in the event of a claim.

3. Ask them to visit you to look over your business.

4. Ensure you fully disclose all relevant information about your business

5. Accurately assess the value of your premises & property and the levels of your turnover, payroll and gross profit.

6. Request 3 quotations.

7. Ensure you have all conditions, exclusions, warranties explained to you verbally – a written summary is not sufficient.

8. If you think some of the exclusions or warranties are unreasonable then ask your broker to negotiate their removal.

9. Finally, negotiate the best premium you can get from your appointed broker.

Disclaimer: This article does not constitute specific advice or recommendation to any individual or business. Individuals and businesses should seek the advice of an appropriately authorised and regulated insurance broker or intermediary.