Landlords lord it over leases

Posted by on 14 June, 2013 No comments as yet

Small print, in leases, that is rarely read, can lead to insurance problems, uninsured losses of occupants and confusion over who pays for what when thieves target leased or serviced offices.

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The price of fashion

 

Mark calls me and tells me that his office has been broken into overnight. Indeed, all six offices in his building have been turned over.  The office is in a fashionable part of London, and somehow they managed to bypass the security on the front door, unpick the locks on the first floor security door and then pull each of the glass doors to each office, off their hinges. Mark wasn’t initially concerned about the items stolen because it was only a redundant laptop, and a safe full of paperwork, rather than money.  He did feel sorry for the five other companies on his floor, because the laptops that were stolen from them were new, contained sensitive data, designs, plans, and other important information… not all of which had been backed up.

How the thieves got past both doors seemed a bit of a mystery, the CCTV was in operation and the footage would show who exactly the thieves were.  However, it transpired that the main door lock was not working properly, and the heavy security door on the first floor had not been locked by the last person to leave. No one wanted to admit it was them who had left last, and in such circumstances it’s never easy to determine who that might have been.  The CCTV could identify the culprit, albeit not the culprits that everyone initially thought the CCTV would be used to identify.

 

Landlord negligence is uninsured?

 

The broken door to the street had been reported to the landlord, so they had been negligent in not arranging for an immediate repair. This certainly would have prevented the problem,  but how did the thieves knew that this door was not working. It’s not sinister, they are purely opportunists. It’s daft that both security doors were left unlocked at the same time but it happens because we’re human and forget things. Sometimes these mysteries are never unravelled. Mark would have been gutted if it had affected his cover.

I had already visited Mark’s premises, to ensure that the security that he did have control over was accepted by his insurance company. When we first explored Mark’s prospective requirements, we had to negotiate with insurance companies because some of their humans had forgotten that a trendy office should have a glass sliding door. If you ever look at insurance company requirements you’ll find they’re quite ambiguous when an unusual feature is in existence. This often crops up with serviced offices, because landlords of these places do not spend a lot of money on the security because they assume nobody will get past the desk security.

They don’t realise that it’s not unusual for someone to “stowaway” in a premises and rifle through unattended offices overnight, before pushing an emergency exit door open and carting off their booty. Thieves love serviced offices because landlords are never going to warn proposed clients of this weakness when they are trying to sell them their office space.

 

Who is going to pay?

 

You would think that the landlord would accept responsibility, having not fixed the door. However, in my experience, they simply refer you to the clause in the lease, which confirms that they are not responsible for a loss of this type. The way leases are worded, it could be argued that they are not responsible for anything, but I am not a lawyer – I only wish I were that clever. The excess on office insurance is usually quite low – around the same amount as an hour of a solicitor’s time. It makes sense to pay a solicitor to review a lease or serviced office agreement. They will advise you on exactly what the landlord not taking responsibly for, giving you the opportunity to cover yourself for the balance

So, how do you enforce your rights against a negligent landlord? You could, in theory, stop paying your rent – to balance things out. However, you will find that an established legal process will kick in when you don’t pay your rent, because clauses in the lease normally dictate that there is no relation between the two issues. You might have to sue them, or at least threaten to. And if you are going to do that, you will need some sort of legal backing. This is widely available; indeed, a lot of people have this form of protection, yet because their cover has not been explained to them in detail they would not even know.

Wrap up: When you are in an office or any premises where you do not control the security, it makes sense to ensure that your premises are well protected. If undesirables do visit, and find that your security is stronger than everyone else’s they will, at least, leave you until last because they are usually in a hurry. It takes seconds to prize a door open and rifle through an office – thieves are usually after things they can sell for cash, don’t you just love the modern phenomenon of “pop-up” pawn shops. The fact these thieves took the safe indicates that they had a getaway vehicle, yet this is not always the case. The security to your premises is your responsibility. Don’t expect a landlord to be too concerned about it.

Top Tip: Mark discovered that the sensitive information in the safe meant that he did actually have to notify people if their privacy was likely to be breached. This is a requirement of the data protection commissioner, and applies to anyone who collects certain types of sensitive data. Fortunately, Mark and I had discussed this at the outset and the cost of doing this was not prohibitive.

 

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Warped Speed Decks Designer

Posted by on 31 May, 2013 No comments as yet

This article is about how fads can cause problems, how items go out of fashion quickly and what happens when someone supplies a product that doesn’t stand the test of time.

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Decking your Clients

 

I’m often introduced to garden designers by my architect, and design & build clients, who rely on designers when undertaking large projects. A number of years after being introduced to one designer I had the urgent call saying “that issue we discussed has just come up, literally”. Our previous discussions included the provision of products including wooden decking, which was all the rage a few years ago.

When I first start discussing risks with the client they indicated that they did not require any cover for products because they kept a full list of who they purchased from. I did explain that sometimes product suppliers went bust, leaving those that bought them holding the baby. It was in a stronger financial climate and the designer felt that the supplier was “too big to go down”. They also said that if something did go wrong, they would ensure that client targeted their legal action towards the people who made the product. I explained that this would be wonderful, typically, most people complain or take action against the person who issued the invoice when a project fails or didn’t meet their expectation when it was completed. It also happens sometime after work is completed because new Products take some time to get used to or bed in.

 

No surprise there then

 

It wasn’t a surprise when I received a call from the client to say that they would now like to investigate the cover I previously recommended. When I asked what had changed it was the supplier who had disappeared from the decking landscape and therefore unable to provide back-up if something went wrong.

I said I was happy to look into it, and asked relevant questions, because it’s important that I understand the current issues before making an accurate assessment of risks. It transpired that another designer had been supplying decking from the company concerned and it had deteriorated quicker than it should have. This made the client concerned because they thought it could happen to them. They could be accused of being erroneous in their selection of the product which seems harsh at first. What would you do if you had paid someone to design something that broke or failed within an unreasonable amount of time?

 

A stitch in time saves nine

 

The unfortunate designer had recommended this decking on a number of occasions when they were under pressure to reduce their costs in order to win projects. This short term gain usually leads to a long term pain. And people who get tough on price may well be the same kind of people who will complain when they don’t get their moneys worth.

The issue that concerns me is the number of business people, especially those who need products to complete their projects, who believe they can refer a disgruntled client to the product supplier when something goes wrong. It’s odd that they expect clients to leave them in peace when it was they who recommended the product in the first place. Yes, many designers have terms and conditions which say the product supplier is responsible for the quality of a product. However those Ts & Cs are somewhat meaningless when a client issues proceedings because “the product should never have been used”. There are many grey areas that contracts fail to address. They will still have to find a way to ensure their client turns their aim towards the actual miscreant, product supplier. Which takes time that should be spent doing business.

 

Wrap Up: Insurance helps reduce the financial impact when things go wrong. It does not prevent things going wrong. Businesses can get caught in the firing line even when it is 100% clear that they are not at fault.

 

Top Tip:Request copies of insurance of anyone you work with. If they go bust, their insurer can be persuaded to deal with certain claims.

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Tailor-made insurance

Posted by on 18 May, 2013 No comments as yet

This article highlights why it makes sense to review the risks a business faces, check that insurance policies are fit for purpose and what can happen if this is not undertaken regularly.

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I have this cover – what is it for?

 

After successfully covering something that the incumbent broker couldn’t, without too much trouble, I was invited to visit their premises, take a look around, and undertake a review. A reasonable way to reduce the time it takes to undertake a business risk assessment is to look at current insurance documentation.

Having collected the information, there was one piece missing, and I received an email to say it would be forwarded on to me as soon as it was received from the broker. At the same time the gentleman said it includes “x cover, and I don’t know what that is”. This is not unusual in my industry. A lot of people build relationships with their brokers and then buy what they recommend. Yet it appeared that the broker had recommended this particular cover, but had failed to remind the client what, or how, it actually protected them.

Does a review mean rates will increase?

 

When the document arrived it was pretty standard. After discussing various cover with underwriters, we got some options. The next step on such a large insurance programme (we are talking about a company who export £1.7million of high quality product to America), is to sit down again and discuss the terms and conditions of the options available to us. The rates we had obtained were 25% less than they were used to so it made sense for the Finance Director to invite us back to discuss in detail.

During this meeting I asked about previous incidents. It had previously been declared that there hadn’t been any in 5 years, apart from a mobile phone being lost. Whilst I collected information about staff, including health and safety arrangements, the Director sighed “staff, our biggest expense and liability.” I enquired how they proved to be a liability if no claims had been made and he said “we don’t have to tell them about things that aren’t insured, do we?” I ventured that they may not have to, yet insurance companies were not that kind. Insurance company requirements often mean that every issue has to be disclosed, no matter how trivial or whether it related to the cover they were providing or not. So the client regaled me with the tale of the dissatisfied employee who had threatened starting a tribunal alleging stress they were suffering was related to their work, and they had settled for £15,000 on the recommendation of their Human Resources consultant.

What do you mean we are covered?

 

I asked the client if they had discussed the stress related claim with their broker. “No” he replied, “we are not covered for this.” I felt it would be cruel to tell him that one of the policies he had in place would have provided him with advice on how to reduce the cost and time spent on such issues. Another may have provided cover for a legal defence and paying compensation if it were awarded. If only it had been explained to the client before the incident happened. This is because some policies only pay out if an issue is reported to an insurer as soon as it crops up.

As I said before, this is not unusual in my industry. Whenever someone tells me that they have insurance, but are unsure of what it covers, I realise that their broker has been order-taking, rather than providing an assessment of risk or any advice. What really sticks in my craw is that the previous broker had sold them a policy which wasn’t much use to them, yet by taking one of the optional extensions they would not have had to pay this £15,000 themselves So, with their current broker they invested over £100,000 and still had to fund a £15,000 claim from their own pocket.

At the last minute, the incumbent broker did try and persuade the FD that he should stay with them, and even resorted to the underhand tactic of trying to approach the insurance company I had recommended so that they could copy the work I had undertaken, and pull the rug from under us. Luckily they were not successful because we have strong relationships with underwriters and they give us exclusive terms and conditions, that order taking brokers cannot access.

The most alarming thing about this rather typical scenario is that the broker could have prevented his client from obtaining the cover he actually desired by trying this underhand tactic. The broker would have known this was the case, but was far more concerned with keeping the business than helping the client protect his.

Wrap Up: At the beginning of the process I had explained that his incumbent broker would probably try underhand tactics and it was best he didn’t tell them that we were involved in a review because it may prejudice his position if he did. He agreed that that was the case, yet when put under pressure by the incumbent, who begged for one more chance, he nearly shot himself in the foot. It happens, regrettably, all too often – yet not to us.

Top Tip: When seeking an assessment of risk, it’s important to request assistance from someone who has a reputation for looking after their clients rather than being an excellent salesperson. The hard sell is all too evident in this industry and masks the underhand tactics that too many brokers participate in, to protect their not so hard earned income.

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Smashing lady is actually a criminal

Posted by on 4 May, 2013 No comments as yet

Geoff calls me to ask if I can help him with protection for a large amount of jewellery he has just bought his wife and we always help our business insurance customers when they need help with their personal asset protection. While working out the particulars Geoff asks me if I have time to hear a short, but interesting story. Geoff is an entertaining guy, and I’m always happy to hear what’s been going on in his world.  He starts regaling me with a tale from a friend of his, who had been at home when he heard a loud bang, and his wife started shouting for him. He sped downstairs and was confronted with the sight of his front garden wall – newly decorated with a BMW.

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Who Done It?

 

A lady who looked physically shaken, was standing in his front garden, saying “a guy crashed his car into mine, knocked me into your wall and then disappeared.” Over a cup of tea she explained how she had been driving down the road, when she had been shunted from behind, left the road, hit the curb, and landed on top of his wall, rather than driving through it. There was no real evidence of damage to her vehicle, so it looked plausible.

The police were called and statements were taken. The lady drove off, regrettably she didn’t know the identity of the perpetrator who had crashed into her.  She didn’t know the make of the car or the registration number, because it had happened so quickly.

She did it!

 

Some time later a neighbour stopped by to ask what was happening with the demolished wall was told the tale of the lady being shunted into the curb and over the wall. At this point his neighbour informed him that his CCTV told a completely different story.

As Geoff’s friend watched the CCTV footage, he couldn’t believe his eyes. The lady’s BMW was spotted travelling down the opposite side of the road that she’d said, and suddenly left the road as her head disappeared from view behind the windscreen. Her car then clipped the curb and demolished his wall.

Fraud, lies and videotape

 

He could not believe what a performance this lady had put on, both for himself, his wife, and also for the police. He was incandescent by the time he had reached the end of the video footage, asked for a copy, stormed down the police station, demanded that the lady be arrested for fraud. Regrettably nobody had kept her details. Fortunately the CCTV recording had the registration plate number. The police are unlikely to investigate the lady for fraud, as they feel the insurance company would deal with the claim. Yet it is an offence to damage property whilst driving and not report it to the Police – check the highway code.

Is this gentleman incandescent enough to launch a private prosecution – probably not! Has he learned his lesson that what is often perceived may not be the case – yet this is what typically happens when anything goes wrong. I told my friends about this scenario and we all agreed it’s rare for people to take responsibility when things go wrong, sometimes because of the financial penalty. Most people don’t plumb the depths this lady did yet they do think their insurance premium will go up if they make a claim – which is untrue because not all insurances have a “no claim bonus”.

Wrap up:  A lot of businesses relationships with their suppliers go sour when it’s found they don’t provide the service they said they would and use their T&C’s to avoid paying a penalty. Let’s face it, some suppliers best performance is in the tender process.

Top tip: Follow me on Twitter to be the first to hear real evidence of the Police crackdown on whiplash claims. It will happen because the Government has realised that it’s caught up in insurance company unwillingness to drive change. This happened in the1990’s when the Police were swamped with claims for car stereos. The Government forced car manufacturers to improve security.

Share this: With anyone who complains about their insurance premium increasing. If it’s car insurance they’re complaining about, we don’t do it because it’s such a mess thanks to direct insurers and their unwillingness to detect fraud. Yet we do have this nifty tool that helps everyone reduce their premium.

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Directors need a law degree to understand their liabilities

Posted by on 19 April, 2013 No comments as yet

When the going gets tough, everybody gets the blame. This article is about how recessions bring increases in claims, why this happens and why insurers are always well prepared.

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Out of touch, means out of pocket!

 

There’s a growing debate on Directors protection (they need protecting from regulators looking to fill Government coffers), fuelled by an article in a legal publication. Directors are finding that the cover they thought protected them actually doesn’t, because of small print. Lawyers are not being paid as a result and they’re starting to wonder “why?”

TheLawyer.com are a bit late in noticing this issue – we highlighted it back in 2010 when we wrote about the withdrawal of legal defence for mad Bernie Madoff.  In mad Bernie’s case, Lloyds of London spent £4 million defending him before they pounced on the opportunity to withdraw cover, when one of his co-defendants pleaded guilty to fraud and admitted Madoff was purposely stealing client money, rather than accidentally stealing people’s money.

I agree with most of the comments in the article, yet the paragraph that says that insurance “will cover all Directors defence costs” only mentions one exception to the rule. There is always more than one exclusion – plus each policy is different. If they weren’t, insurers would be suing each other for breach on copyright, at the very least. And that’s another legal matter entirely.

How do insurers avoid getting caught out?

 

Insurers were prepared for this recession, as a result of the last recession. They’d worked out what caused the majority of claims last time and reduced, excluded or watered down the options they made available thereafter. They sneak most such changes into renewal documents because they know brokers and policyholders don’t read them.

It doesn’t help that a lot of Directors have been advised that a limited company protects them personally. No it doesn’t, as I keep telling them….gently, it covers shareholders. Directors that are shareholders do not get the benefit of shareholder protection. After all, they are supposed to be running the business and keeping an eye on everyone else in it, not turning a blind eye to rogue Directors riding roughshod over clients, employees and shareholders.

 

Wrap up: Not all Directors are the same so why would their insurance be? Work out what could go wrong before embarking on a search for comprehensive cover. It doesn’t exist.

Top tip: Insurers rarely lose so peek at their exclusions to see what they are prepared to take  a chance on.

P.S. Look out for our next blog which highlights how a lady reported the obliteration of a garden wall to a home-owner, shared a cup of tea with them and the “investigating officer”, then (after excusing herself) be unveiled as the perpetrator – only thanks to a neighbour’s CCTV.

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Health and Safety can make you feel ill

Posted by on 16 March, 2013 No comments as yet

This month is about the perils of consultants who, errr, don’t consult, why anyone offering insurance as an “add-on” should be carefully checked, and the scale of the trail of damage they can create.

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‘Elf & safety chancers

 

My hotelier clients are truly wonderful people. Like myself, they ensure that their clients get a good night’s sleep 🙂

One of them called me the other week and asked if their insurance covered them for the new regulations. “I must have missed something… what new regulations?”

It transpired that a Health & Safety consultant had turned up out of the blue,  making out they were some sort of official and asked to look around.  After lots of tutting, he then told the hotel staff that their boss was going to be jailed if they didn’t sign a contract for three years advice.

Putting the frighteners on (best gravelly voice required)

 

The fact the hotel already had an up to date and robust Health & Safety policy hadn’t crossed the consultant’s mind. He just wanted to scare people into signing up. It’s why Health & Safety has such a bad name. It’s used to frighten people into parting with their hard earned money instead of protecting people as they go about their day to day life.

Even worse than “the frighteners”, is the fact he included insurance in his offering. This would have been, in part, a duplication of cover that was already in place. What’s wrong with dual insurance, I hear you ask?  Well, it causes delays at the very least, because each insurance company will suggest that the other is responsible for settlement , a case of “after you, Claude”.

So who pays – not the con man

 

In the worst case scenario, it can lead to claims being declined because insurance companies get a bee in their bonnet when they assume that claimants are trying to claim twice. It’s seldom true – people resent the hassle of insurance, never mind paying for it twice. It can lead to policies being cancelled because of something called non – disclosure.

And it doesn’t end there. If someone’s policy is cancelled by an insurance provider then they must inform future insurance providers of the cancelled policy, at the time that they are seeking alternative insurance solutions. Insurance companies can void the claims of those who have an an incidence of non-disclosed cancellation.

If the current insurer decides to increase their policy premiums because they suffered losses elsewhere in their portfolio, you wouldn’t want to be stuck with them forever.

Wrap up: Health & Safety is important, yet should be treated as a way to prevent issues, rather than be used as a stick to beat people with.

Top tip: Check your Health & safety, employment tribunal and other business protection practices do not include duplicated insurance.

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