Month: January 2013

If you’ve ever dealt with an insurance broker for your business cover, you may have heard of the term ‘underwriting agency’.

So what is an underwriting agency, and what do they have to do with your public liability and other forms of business insurance?

In this guide we won’t go into all the boring details, but instead we’ll give business owners a quick overview of what these agencies are and what they do.

What are they?

An underwriting agency is not an insurance company. They are instead organisations which sit in between the insurance companies and insurance brokers to help businesses get the cover they need.

Generally an underwriting agency will specialise in a smaller number of areas and industries than a traditional insurance company, however this allows them to have a deeper knowledge and understanding of those selected industries.

Why are they used?

If you operate a fairly mainstream type of business you will generally have no problem in obtaining public liability insurance through one of the big insurers.

But if you run a business which operates in areas considered by the insurers to be high risk, then you may find that none of the big insurers will want to deal with you.

This is where the underwriting agencies come in. They work with the big (and small) insurance companies to put together packages to suit some of these ‘hard to insure’ businesses.

For example most of the mainstream insurers will not cover businesses working at heights exceeding 10 or 15m, but a number of underwriting agencies have been able to put together policies to suit these businesses.

Are They Safe?

The insurance policies issues by underwriting agencies should always be backed by an APRA regulated insurance company. This means that they have met the requirements set by the Government authority responsible for insurance and financial institutions.

If your broker recommends a policy which has been written via an underwriting agency, you should ask your insurer who the policy is ultimately with. In many cases you may not have heard of the underwriting agency, but you will have heard of the ultimate insurer.

There is generally no reason whatsoever to think that a policy provided by an underwriting agency will not be safe.

Should You Use an Underwriting Agency?

There is no good reason why you shouldn’t take out public liability or other forms of insurance through an underwriting agency, and in some cases it may be your only choice.

In some cases underwriting agencies will charge additional fees, but if you cannot obtain cover through a mainstream insurance company it is generally the best alternative.

For more information about using an underwriting agency for your business insurance needs speak to your broker or adviser. You can also check out the Underwriting Agencies Council website which contains some useful info.

Late last year we started looking at some of the personal forms of insurance to assist business owners.

In our first instalment for 2013 we will look at one of the most important yet underutilised forms of personal insurance available to business owners – trauma insurance.

Trauma insurance can provide major benefits to policyholders on a personal level, but it also has some benefits which are specific to business owners and partners.

Whilst we specialise in public liability insurance, we do believe it is important for business owners to know about all of the forms of protection available to them.

What Is Trauma Insurance?

Trauma cover is sometimes referred to as ‘life insurance for the living’. It is a form of insurance which is designed to help you in the event of critical illness or injury.

In the event of being diagnosed with a critical illness your trauma insurance policy will pay you a lump sum amount agreed to at the time you took out the policy.

The funds from your policy can be used to cover medical expenses, travel and accommodation costs, lost income and any other purpose you see fit.

There are dozens of conditions covered by trauma insurance, but the most commonly claimed upon conditions include cancer, heart attack and stroke.

Benefits for Business Owners

Whilst virtually anyone can benefit from trauma insurance, there are some benefits which are unique to business owners.

Let’s say a key person in your business was to suffer a critical illness or injury and was unable to work.

Obviously there would be financial and emotional strain on the employee and their family, but there can also be financial strain on your business if the person was a key part of your revenue and profit.

By putting together a key person insurance package which includes trauma cover, you can ensure that you business will also receive a payout which can replace lose revenue or cover the costs of replacing the key person for a period of time.

Trauma insurance can also be used as part of a buy-sell agreement between business owners. This can help to ensure that business succession issues are managed in the best way possible if a partner in the business was forced to leave the business as a result of a critical illness or injury.

How Much Insurance?

There is no scientific calculation which tells people how much trauma they should have, however plenty of insurance industry participants have their own ideas on how much cover is enough.

If you are insuring yourself personally, the amount of cover you take out may be linked to how much you are prepared to spend on premiums. From our experience, anywhere from $250,000 to $400,000 seems to be an average figure.

If you are insuring someone as part of a key-person or buy-sell arrangement you need to calculate how much money is going to be required in that specific situation. A financial adviser or accountant will be able to assist you with this.

More Information

Whilst trauma is technically a form of personal insurance, it can certainly be utilised in a way which makes it an important form of business insurance.

For more information about how you and your business could benefit from trauma insurance please contact your financial adviser.

Here at Public Liability Insurance Australia we have access to a team of qualified financial advisers who can assist, so you can also contact us if you’d like to be put in touch with an expert adviser.

When taking out public liability insurance you will most likely be asked whether or not you undertake any work involving welding, cutting or grinding etc.

Generally these are known as ‘hot works’.

Insurance policies treat hot work in one of two ways. Some policies exclude it all together, whilst other policies cover it subject to certain conditions.

In this guide we’ll take a look at the implications of hot works on insurance.

What is Hot Work?

Some insurance companies have different ideas on what should be considered as hot work, but generally it will include the following activities:

• Cutting
• Heating
• Welding
• Grinding

Basically any type of work which results in the generation of heat.

Work that involves heating appliances is not regarded as hot work unless your actual activities are generating heat.

For example if you install or maintain heaters, ovens, hotplates etc but do not undertake any cutting, heating, welding or grinding, then the work would not be considered to be ‘hot’.

When it comes to cutting, generally hot work involves cutting metal, steel or other materials that can generate significant heat during the cutting process.

Who is Affected?

The most commonly affected business types by this issue are boilermakers and welders, however potentially all trade businesses could be affected depending on their work activities.

Is Hot Work Covered?

Most public liability insurance policies will cover hot work, however virtually all policies will have special conditions or restrictions in place.

The most common condition is that all hot work is done in accordance with Australian Standard AS1674. This standard mainly relates to welding, but it is relevant to all hot works.

Some insurers take things a little further and have put in place additional conditions and specific precautions which must be undertaken, such as how far away the work must be undertaken from other flammable materials.

It’s important to keep in mind that a small number of insurers exclude hot works from their policies completely, so you need to check this if you are undertaking any such work.

More Information

If you do undertake any business activities involving heating, welding, cutting or grinding it is important to let your insurance broker about it.

Your insurance broker will then be able to discuss the ramifications with you and select an insurance policy that is best going to suit your needs.

Hot work doesn’t mean you can’t get insurance, but it is an important issue to consider before taking out a new policy or when reviewing your existing cover.