30 Jun

Safety-first Approach Helps Reduce Insurance Costs

Safety-first Approach Helps Reduce Insurance Costs

Insurance taxes have steadily risen over the past couple of years, which has resulted in higher insurance costs for motor trade businesses. It is expensive not just to buy a new insurance but also renew existing insurances, though there is a way you can cut down on insurance costs.

To understand how you can reduce the burden of insurance, you must first understand how underwriters assess the risk profile of the policyholder. And one key factor when evaluating risk profiles is the health and safety of a workplace.

A garage with modern equipment, tools that are regularly replaced and procedures designed by experts will always garner more trust than a home run garage with readily available tools, limited systems, and part-time employees. Insurers look at the employers track record and his willingness to invest in the health and safety of his employees.

Following guidelines and establishing procedures always helps improve your company’s safety record. Use experts or have your experienced employees laydown the exact procedure for any activity. Take, for instance, repairing a cracked windshield, and prepare a checklist containing the steps necessary to remove, repair and refit it. Ensure that you always hire highly trained and experienced individuals. Maintain a standard of safety in your workplace by keeping fire extinguishers nearby, practicing drills and running a tight ship.

Addressing the health and security of your employees has two advantages. First, the probability of a workplace accident or defective repair is small. Second, in the event of a mishap, you can quickly go back to the checklists and documents about the event and pinpoint the exact cause. By finding the exact reason for an incident, you can prevent it from happening in the future and reduce your company’s liability.

Another added advantage of the safety-first approach is that your no claims bonus keeps growing overtime, thus reducing the premium you pay at the time of renewal.

Remember if something is predictable, it is preventable. Health and safety being the employer’s responsibility, profoundly affects how much you ultimately spend on insurance related costs and practicing preventive planning will eventually reduce the overall costs. If you wish to know more on how you can reduce your insurance costs, speak with our advisors, who can guide you and help with your questions.

28 Jun

Choose Indemnity Over Premium

Choose Indemnity Over Premium

Insurance is how you protect your interests against possible risks. A customer meets with an accident, due to a faulty break pad you installed. Your business is liable for damages and open to litigation. Eventually, your company must bear the cost of a dispute, possible damage compensation and loss of income. The repercussion of not having the correct cover is that you pay out of the income of the company.

As a rule of thumb, you should never compare insurance prices when taking a new motor trade cover. Instead, you should ideally be looking at the indemnity level of each policy, checking the levels on a per event basis. Staying fully protected must always be your priority.

Understanding How Indemnity Works

Every policy will stipulate the highest pay-out for various events. Depending on the kind of policy you take, it will vary from one situation to the other. Your objective is to understand how much the insurer will cover in every possible event.

At i4MT, we advise our clients to consider the worst case scenario as a guide for choosing the level of indemnity they will need. Depending on the nature of your motor trade business, you may have to tweak the reimbursement for specific situations. For instance, if you own a car wash, you probably do not drive customer vehicles on public roads and therefore need not invest in an expensive road risk insurance. However, a mechanic has to test drive vehicles before and after repairs, which exposes him to third party damages. Therefore, a mechanic should invest in higher road risk insurance.

The level of indemnity varies depending on the kind of insurance you take and the exact reason behind any claim on the insurance. If the indemnity is not sufficient, you receive partial claims benefit and have to bear the additional cost. Unfortunately, deciding the appropriate level of indemnity for any single event is difficult to gauge. Hence, it is always best to study your company practices thoroughly and determine the risks that need the highest allowance.

Motor Trade Insurance already offers standard coverage over motor trade related risks. However, you may require more cover if you hire employees, allow public access to your workplace and if you provide any repairs or services that directly affect the customer’s safety.

Public Liability Cover

Some underwriters call it as third party insurance, which can only be claimed if damage or injury is sustained to a third party, due to the negligence of the policyholder. All legal costs arising from the event are also covered by public liability insurance.

Employers Liability Cover

Any company or business with employees must have employer liability insurance, as mandated by the Health and Safety Act. If any employee is injured while on the job, then the insurance will handle hospitalization bills, compensation and litigation costs arising from the incident.

Professional Indemnity Insurance

We advise adding a professional indemnity clause to motor trade insurance since you are directly responsible for any work you do on a customer vehicle. If the work you did is determined as the cause of the incident, your company is liable for monetary compensation or even criminal prosecution. You can take further riders on your PI insurance such as a defective workmanship cover that protects against possible negligence claims and more.

A basic road risk insurance is never sufficient for any business. Though it is the bare minimum you need, it is not holistic. Naturally, cheap traders insurance offers limited indemnity for anything other than road risk and related added covers. What you should always aim for is higher indemnity for a range of situations, instead of buying the cheapest insurance available.

21 Jun

The Intelligent Thing To Do Is Expand Laterally

The Intelligent Thing To Do Is Expand Laterally

What is expansion in business terms? Why of course, it is growth. Any form of growth that does not arise solely from greater sales but out of new ventures or diversified markets is called expansion. Take a newspaper for instance. It decides to expand its horizons by venturing into another country. That is an expansion because of diversified markets. Next, it decides to cut raw material costs and sets up a newspaper recycling factory. This is vertical expansion. If the paper now decided to move into magazine printing, that would qualify as a horizontal expansion.

Basically, horizontal expansion is the practice of venturing into sectors or practices that are closely related to what your business currently does. For a newspaper, magazines are close, but music CDs are not. Magazines, therefore, qualify as a horizontal expansion.

The commercial meaning of horizontal or lateral expansion is to acquire companies competing with you in your own niche. However, that definition mostly applies to large conglomerates and multinationals. 

Business experts and analysts suggest horizontal expansion because it is easy to implement and cost effective too. As a mechanic, you already make repairs to customer vehicles. Maybe you also own a garage. In this case, the horizontal expansion would be to buy a van and turn it into a mobile garage. You know how to run a garage, and now you are venturing into a new segment of your trade, which is offering mobile assistance. The learning curve associated with such an expansion is small. A towing service is also another example of a horizontal expansion. Refurbishing used cars, offering at-home repairs and motorway servicing, annual maintenance contracts, MOT service are all good alternatives.

The investment required to expand laterally is significantly lower. An example of vertical expansion for a mechanic would be to invest in a battery and spare parts shop. While this does bring in more sales and reduces the cost of spares for your own garage, it needs greater investment and is no longer in your realm of expertise.

Motor trade industry offers plenty of opportunity for horizontal expansion. The possibilities are simply endless. Best of all, because almost all motor business practices run from a garage, your insurance cover should include your new venture. You do not need additional covers though increasing indemnity and reducing the voluntary excess is always advisable.

You can speak with our advisors and insurance experts by calling 01782 880140 and learn which ventures qualify as a lateral expansion of your existing business and how it affects your current policy. We are always here for any queries or questions and love to see our customers doing well.


19 Jun

Expanding Into A Garage Affects Your Insurance Too

Expanding Into A Garage Affects Your Insurance Too

As a part-time or full-time home based trader you have earned a decent living. Things are going great, but now you feel the time is right to make a move into a garage. You even found the perfect place to set shop. It is near the intersection, enjoys heavy traffic and has sufficient space to carve out a small office out front to entertain customers. Best of all, it costs less than what you expected. You move into a garage, and your business prospers. But, now your existing motor trade insurance is useless. You have to take extensions and extra covers, which adds to your insurance premium big time. Have you calculated the costs yet?

There is a lot more investment that goes into a garage, which you would not normally do as a home trader. Tools, equipment, staff, mechanics, company vehicles, paying the bills, stocking up on spares and accessories – the list is virtually endless. Your insurance cover is now grossly inadequate to protect your investment and business. That is where a combined premises cover comes into play.

With a combined premises insurance you get a fully customized policy that includes more than the basic road risk cover, which is the least you need to run any motor trade business. As a trader, you decide the insurance premium you are comfortable with and accordingly take up covers to protect your garage. Stock, spares, and vehicles are all included in business premises covers, but tools and equipment are not.

If you hire staff, you better have employers liability as it is necessary for any business with employees and if you welcome the public into your garage, keeping public liability cover is always advisable.

These are the least any garage trader should have. Naturally, they all cumulatively cost a lot more than what you were previously paying as a home trader. However, insurance is all about mitigating future risks and with a larger business, more employees and assets, your risks are higher.

It can be difficult moving from a home trader to a garage trader without having to pay through the nose for insurance, but your premiums will not always stay this high. As you continue year after year and accrue no claim bonuses, your premiums will keep going down. Moreover, you can always begin with bespoke plans that take into account only what is vital to your garage and as your business ages, you can add extra covers.

The best thing you can do is when moving to a garage is to set aside a specific amount as a premium for insurance, and we will get you a deal within your budget that will not just be competitive but inclusive of several covers vital to any garage trading business. Remember, there are many extensions available for additional protection other than the standard ones such as business interruption cover, money cover, additional business use and engineering inspection policy.

16 Jun

Can You Trust Your Insurance Broker?

Can You Trust Your Insurance Broker?

Insurance brokers are a dime a dozen. In fact, there are plenty of websites dealing with all kinds of insurance but how do you know which of them are trustworthy? Easy, spend more than 25 seconds investigating their website!

Do Not Entertain Unsolicited Calls And Offers

Imagine browsing Facebook, and you get a message from Mark offering you a special interest-free overdraft for £1,000 but only if you make a deposit of £500 today to open an account with the Bank of Buck. Would you fall for this trick?

Such an offer does not sound reasonable, to begin with, and even if it did, you should never open an account with a bank that you are not aware of. In the event you feel the offer is legitimate, should you not at least investigate further? Ideally, you would visit the Bank website, check for credentials, call up friends and family members in the banking circle.

What if the offer from Mark was for Barclays? Would you be just as exhaustive in your research before committing?

Never trust unsolicited calls and offers no matter how legitimate they may sound. Always follow-up and do your research. If an insurance broker offers you something that you never asked for, remember that they approach thousands of individuals on a daily basis, you are not special. Ask questions, find out who they are, the name of their brokerage firm, the underwriters they deal with, and what are their terms.

The first step to weed out the bad insurance broker is to check how much attention they give you once they realize you aren’t an easy mark.

Check Credentials

It isn’t as much as what you see or hear but what you read that matters. Remember until you have parted ways with your money, you are in control. Use this time to establish the credentials of the broker. First check if the company is registered with Companies House, has a full address and is recognized by the Financial Conduct Authority or FCA.

To check with FCA, you simply need the name of the company or its FCA number (ours is 447730, and we are registered as a trading name of One Sure Insurance Limited). If you cannot find the full address of a company or the FCA number anywhere on the website or brochure, that’s your first indicator of a fraud. If you find the FCA number, but it does not belong to the company you are dealing with or any of the registered trading names on the FCA number, you should immediately stop all communications with them and report to the Insurance Fraud Bureau or IFB.

If you receive a call or mail from an individual claiming to work with a particular FCA registered company, ask him or her for the employee identification number. Every insurance company has to keep track of all its advisors and brokers. Verify with the company that the individual is indeed who he claims to be and inform them that one of their employees has contacted you. State the offer on the table and ensure it is recognized by the company before you proceed any further.

Fraudulent Brokers Online

Shopping online for an insurance policy is just as perilous as answering unsolicited calls and offers. Today, it is mighty easy to build a beautiful website that immediately draws your attention and compels you to sign a contract. Unfortunately, finding the fraudsters in a sea of online brokers is tedious but entirely possible.

The same rules apply as before. Search for the FCA number and full address. Check the FCA website and verify that the name of the company is registered to the FCA number. Some sites will advertise big names in the insurance industry such as Zurich and Aviva to lure you in. Do not get swayed. Follow all the steps meticulously and research the contract before finalizing it with a payment.

Remember, members of the police force, bureaucrats and other reputable professions all have been victims of online fraud. The only way to be safe is to exercise due diligence.

15 Jun

How The Location Can Affect Insurance Cost

How The Location Can Affect Insurance Cost

Insurance is the practice of mitigating risks through a guarantee of compensation in lieu of a premium. Now, for an individual, the practice can seem simple enough. How much is my house worth? What is the current real estate prices in the area, what is the market like currently? That’s exactly how much of indemnity a home insurance should have. For an underwriter though, premium calculations include more than just the compensation.

One key factor is the location of your asset or item being insured. For the sake of brevity, we will stick only to traders insurance. However, the concepts we discuss here broadly apply to any insurance. You can just as easily replace traders insurance with any other form of insurance, and the factors will still hold true.

Location As A Sum Total Of Numbers

To the average individual, location is just a spot on the map. It is a tiny dot that represents the ground on which you conduct business. However, every tiny dot on a map comes with its own risk profile. Here are a few location specific factors that affect the premium.

  • Sales Forecast – Prime city center location brings with it a larger pool of clients and hence a higher sales forecast. Naturally, your risk increases as you take in a lot more customers. You handle more vehicles that can meet with an accident. Your tools and equipment can wear out sooner than normal. You pay more premium to cover the increased risk and also because you can afford a higher cover than someone operating from a village.
  • Crime Rate – You found a nice quaint garage out in one of the busy areas of town, but the locality has a high crime rate. Your premium increases as now the risk of theft and vandalism are greater for your business premises.
  • Flood Risk – Setting shop in a flood prone region or near a river obviously increases the risk of flooding. You may end up paying significantly higher premiums to cover flood risks, but almost all underwriters will include a clause to void flood related damages.
  • Type Of Premises – If you have a business location separate from your home address then the standard road risk policy premium will not suffice as it does not cover the business premises. For this, you need to take an additional premises cover or the combined premises insurance, which will cost you more.

Be Honest In Disclosing Business Location

We understand it can be tempting to register an address other than your actual business location to reduce the premium. However, your claims will be rejected if your registered address is not where your tools, machinery, vehicles or property was damaged.

Be honest when you give out information on your motor trade business even if it increases the premium. Whether your claim is upheld or the indemnity is just, depends entirely on the information you provide at the inception and during the tenure of the policy. Remember to inform your insurance company the moment you change your business address and pay the necessary midterm adjustments to ensure policy continuity.

You can give us a call at 01782 880140 to make changes to your registered address and for anything else. We usually affect changes within 24 hours though it can take longer owing to public holidays and weekends.

13 Jun

Insurance Premium Tax Up By Two Percent

Insurance Premium Tax Up By Two Percent

On July 1st 2017, the Insurance Premium Tax or IPT was raised from 10% to 12%, which is only the second time the government has increased taxes on insurance in 12 months. The higher rate of IPT remains at 20% though. The new IPT rules are as follows:

  • The IPT on any new policy or midterm adjustments (MTAs) drawn out after 1st June 2017 is 12 percent. It applies to all first time policies and renewals due after 1st June 2017.
  • Any renewal or new policy drawn before 1st June 2017 will incur an IPT of 10 percent on all MTAs.
  • The government has put a ‘backstop date’ of 1st June 2018, after which all premiums (additional or otherwise) will be taxed at 12% IPT.

Repercussions of the IPT Increase

The British Insurance Brokers’ Association (BIBA) believes the latest tax hike will affect 17 million drivers, 27 million households, and almost all businesses. Naturally, insurance premiums will increase as a result of higher taxation and this, in turn, can add to the number of uninsured businesses, drivers, and households in the UK. As it stands, the country is already heavily underinsured, and with higher premiums, business and personal insurance consumers may consider forfeiting or reducing requisite cover.

In a recent statement, Association of British Insurers (ABI) reproved the decision by Treasurer Phillip Hammond calling it “reckless and incredibly unwarranted.” An ABI representative went on to state that with the 2 percent increase in IPT, claims costs could increase and this, in turn, may result in higher cost of motor and liability insurance thus affecting businesses and individuals alike.

The latest round of IPT increase penalises the country as a whole as it profoundly affects younger drivers, businesses in flood risk areas and niche industries. Insurance is a means of recovering from unpredictable and often random circumstances. However, with the government’s decision to increase insurance costs, customers may decide that the risks outweigh the benefits and opt to go uninsured.

Insurance4MotorTrade is committed to its customer’s interests and will do all it can to keep the impact of higher IPT to a bare minimum by negotiating the best possible deals with underwriters and ensuring your insurance cover is competitive.