Help to prevent the Escape of Water

 

Escape of Water (EOW) is a term used to define a water leak in a property. It usually occurs in instances where there is a catastrophic burst or slow leak from the plumbing or heating system involving pipes and joints, but also appliances or even faulty bathroom sealant.

EOW related situations have increased across all building types and industries over the last few years and are the most likely causes of insurance claims. According to research by the Association of British Insurers (ABI) in 2020, escape of water (EOW) is the leading cause of residential property insurance claims in the UK. While these type of claims are prolific in residential property the commercial property sector is also at substantial risk.

In 2020

  • 1 in 5 building and contents claims were for EOW
  • 238,000 claims were made for EOW
  • £3,170 was the average cost of an EOW claim
  • Cost insurers on average £1.8m in claims on a daily basis

Zurich Insurance’s own data suggests that whilst the total number of water damage claims has stayed relatively static, the magnitude and cost of such claims has increased sharply and continues to rise.

Checklist to help prevent escape of water

The five-point checklist below, can be used to help mitigate the risk of EOW:

  • Education is key. Ensure occupants know where the water shut-off valve (stopcock) is in case of emergency. Test the valve to make sure it can be turned off quickly and easily
  • Resident checks. Ask residents to complete an annual checklist, requiring occupants to periodically check and report on the condition of key plumbing components, including in difficult-to-see areas, such as behind bath and shower panels – include these checks within the tenancy agreement
  • Maintenance programme. If you have responsibility for the maintenance and repair of a domestic property, make sure there is a comprehensive, planned preventative maintenance system in place
  • High tech solutions. Consider installing leak detection devices that can shut off the water supply and raise an alarm in the event of a leak. Intelligent and programmable equipment also allows you to remotely manage water availability in unoccupied premises, to shut it off and reduce the risk of water damage when it’s temporarily vacant
  • Skills and know-how. Ensure occupants don’t try to mend something themselves. Incorrect installation of pipes can lead to escape of water. For example, not sufficiently tightening a compression joint, or not shutting off the stopcock when fitting a new pipe. Always use experts with the right qualifications and equipment to carry out installations and repairs – or it may cost more in the long-term.

Further guidance

There are simple preventative measure that reduce the likelihood and severity of an EOW occurring. To help highlight and prevent these incidents, Zurich Resilience Solutions have produced a guide for tenants. The guide includes a list of common causes, tips on how to prevent EOW damage, details on incident response and more.

You can download the guide here.

This article is adapted from an original post by Zurich which can be found here.

Risk management guide for the small to medium UK manufacturing businesses

Practical risk management advice for small and midsize manufacturing businesses

While Manufacturing comprises just 5% of the UK’s businesses, it accounts for 10% of employment and 14% of turnover. Of the 270,000 firms that make up this diverse sector, just over half (138,050) are micro and SME manufacturers.

Each manufacturing site has a unique risk profile, however all firms are exposed to a common set of risks. Understanding these risks can help you identify areas of your business that are most susceptible to the types of claims typically made by manufacturers, RSA have created this guide to help you safeguard your business, employees, contractors and site visitors.

This guide covers off the “do’s and don’ts” of the below, and provides practical advice on planning ahead to protect your business.

  • Moving Machinery
  • External storage, fire and arson
  • Housekeeping
  • Hot works
  • Forklift trucks
  • Electrical fires

Click here to access the guide.

Protecting your property from water leaks

According to Ecclesiastical claims data, escape of water is the second largest cause of property insurance claims.

Water leaks that go unchecked can cause thousands of pounds worth of damage and properties can take months to dry out before repairs can be completed. You may, therefore, need to relocate to alternative premises in order to continue to operate.

As insurers, we have seen incidents where a small water leak has quickly escalated into a much larger loss. Whilst your insurance policy may provide cover should an insured loss occur, it cannot compensate for the inconvenience and disruption you may face.

Acting quickly when you discover a water leak can mean the difference between a small clean up job or extensive damage and inconvenience.

Common causes of water leaks

  • Pipework failure, including both compression and push fit joints: flexible hoses used to connect washing machines and dishwashers and as a consequence of corrosion to copper pipe
  • Valve failure, including ball cocks in water tanks
  • Frozen pipework due to lack of heating and/or insulation
  • Poor workmanship
  • Faulty equipment.

Tips for preventing leaks

  • Periodically check your stopcock to ensure it turns on and off easily.
  • Have pipework regularly inspected and maintained by an accredited plumber such as a member of the ‘Association of Plumbing and Heating Contractors’ or the ‘Chartered Institute of Plumbing and Heating Engineers’.
  • Keep on top of simple maintenance such as changing washers and fixing dripping taps.
  • Check water tanks and cylinders for any corrosion and arrange for central heating systems to be maintained annually.
  • Lag or fit trace heating to exposed pipework where there is a risk of freezing.
  • If the property is going to be vacant for an extended period, consider isolating and draining down the water supply or ensure heating to the property is maintained (Please note – this may be a condition of your insurance policy).
  • Never leave the plug in water basins or baths.
  • Install leak detection devices in high-risk areas. These devices will detect a water leak in the earlier stages and raise an alert. They can also be linked to building management systems and may be able to isolate the mains water supply to the property to reduce damage.
  • Flow detection devices may also be considered. These monitor the flow of water in the pipework to your property and isolate it if abnormal flow conditions are detected.

What to do if you find a leak

Did you know that the potential water loss from a burst pipe can be as much as 400 litres an hour – that’s about the same as four full bath tubs of water! So whenever you find or suspect a leak, take immediate action.

  • Turn off your water supply at the main stopcock
  • Turn off the electrics and heating
  • Drain the water systems by turning on your taps
  • If it’s safe to so do remove items at risk of damage to a dry area
  • If water is seeping through ceilings and it is safe to do so, try to collect it in a suitable receptacle
  • Again only if it is safe to do so, if a ceiling is bulging you can consider piercing it to release the water and prevent the ceiling collapsing.
  • Never touch wet wiring or electrical items.

Remember that if electrical wiring or equipment gets wet to always consult an electrician before using again.

This article is adapted from an original post by Ecclesiastical which can be found here.

Considerations of Contractors Professional Indemnity cover

Many contracting businesses who do not specifically design anything for a fee will be unaware of the potential risks they may face in not carrying Professional Indemnity cover. In the increasingly litigious society we live in, where it would seem that everyone wants someone to blame, should you consider cover just to protect yourself if something goes wrong? Often contracts will stipulate that Professional Indemnity cover is required. Professional Indemnity Insurance reacts in circumstances where a client claims to have suffered a financial loss as a result of a professional error made or alleged to have been made.

Even if you have made no error, a policy would provide cover for legal fees to defend yourself.

Contractors may incur design exposures even when they have no contractual liability for design. For example, they may have to make changes as the construction progresses following problems encountered on site.

Contractors have a huge amount of practical experience but are not design professionals and it is often when this practical knowledge, combined with professional expectations, that things can go wrong. Professional designers are not unknown to design something that cannot actually be built and the contractors input may achieve everything intended. However, if it does go wrong, everyone will be pulled into the claim and if the contractor does not carry their own Professional Indemnity cover this can become extremely expensive.

Professional Indemnity cover is arranged on what is known as a ‘claims made basis’ rather than the traditional ‘claims occurring’ which would apply to Employers or Public Liability incidents. This means the insurer on cover at the time an allegation is made would be responsible for the claim rather than the one on cover when the error occurred. It is therefore very important to review your policy carefully at each renewal, particularly if there is likely to be a change of insurer, to avoid any difficulties should an allegation be made after renewal. This also means that cover needs to be purchased for a further period after completion of the work to ensure full protection continues.

For those individuals, particularly one-man operations or very small businesses, they may not recognise that they have this threat, because it hasn’t yet happened to them. But it only takes one complex issue to take up all the management time for a small SME – which typically doesn’t have sophisticated resources, or a legal and compliance department like large companies have – and that can really threaten the business.

Contact us today to discuss Contractors Professional Indemnity cover and how it can benefit you.

What is Indexation and how does it impact your insurance?

 

There are several factors that now make indexation more important than ever. One factor is the significant rise in demand for building materials, and disruption to the global supply chain caused by the pandemic and national lockdowns. Certain elements of Brexit and local shortages of suitable labour are also affecting rebuilding and claims costs.

How does index linking work?

At each renewal of a policy, Insurers adjust the property sum insured, either by applying a flat rate of increase, or having tracked indices of property value. These are usually calculated from data provided by Royal institution of Chartered Surveyors (RICS), the Association of British Insurers (ABI) and the Office for National Statistics. In recent years, these indices have grown at a relatively low rate, but in 2021, the rate of growth has been more significant and sustained. This is now seeing an average of a 10% increase on insurance for property and businesses. The pricing impact of the increased valuations may in part be offset within Insurer pricing algorithms, however most policy holders will be seeing the impact with price increases.

Despite the impact to pricing, this change will benefit policy holders by ensuring they are adequately insured. Under-insurance can significantly affect a claim settlement. Reviewing your sums insured has never been so important with inflation so high. The cost of increasing cover usually is relatively small in comparison to the cover provided.

Speak to your Insurance broker to discuss your current coverage and the options available.

This article is adapted from an original post by NIG which can be found here.

The importance of prioritising both inspection and maintenance of machinery and plant

Why is it important?

Not only does it help protect your staff and keep members of the public safe, but it also helps to prevent interruptions to day-to-day business activities and potentially expensive repair costs.

The words ‘inspection’ and ‘maintenance’ are often grouped together when referring to plant and machinery but in reality, the terms have different and distinct meanings.

In this article from Allianz, they examine why both activities are vitally important. They also look at specific associated health and safety requirements and the potential pitfalls of not keeping equipment in safe, working order.

Click here to view the full article.

If you want to find out more about how you can help keep the workplace safe and open for business, ask your broker for more information about Engineering Inspection services.

Underinsurance ‘made worse’ by rising construction costs

A sustained rise in construction costs this year is increasing the likelihood of significant underinsurance of buildings in the UK.

Recent data from RebuildCostASSESSMENT.com has highlighted how on average, buildings are covered for just 68% of the amount they should be in Britain. However, with rebuild costs rising rapidly, the current situation is likely to be even worse.

According to the Builders Merchants Federation (BMF), prices have risen by between 10% and 15% for products and materials this year. However, some products, such as timber, have seen prices go up by 50% and by as much as 100% for oriented strand board (OSB) and other sheet materials, which are all key housebuilding components.

RebuildCostASSESSMENT.com director Will Molland MCIOB AssocRICS, said: “The main factors at play here are pent up demand following Covid lockdowns and the re-starting of postponed building projects, as well as the impact of Brexit on imports from the EU.

“The loss of around 1.5 million foreign workers throughout 2020 and 2021, many from construction, together with increased demand in other countries for construction materials, such as high Chinese demand for steel and extended lead times for virtually all materials, have combined to create a perfect storm around rebuilding costs.”

Indexation adjustments

Between July 2020 and July 2021, the cost of materials rose by 20%, according to the Office for National Statistics (ONS). The RICS’ BCIS general building cost index is forecast to be 8.8% for the year to September 2021, up from 3.6% for the year to March 2021.

Will added: “It is unlikely that day one uplift or annual indexation will have allowed for these increases and, where a building sum insured is already on the low side, the rising costs highlighted will be increasing the potential for underinsurance.”

Rates used by RebuildCostASSESSMENT.com on commercial property are taken from the RICS BCIS service and are subject to indexation adjustments on a fortnightly basis, allowing for recent increases in material and labour costs. For High Net Worth (HNW) homes regular analysis of multiple data sources, including cost plans from building contractors, is reflected in rebuild rates used along with adjustments for current increases.

“It is expected that general building cost inflation at this level will inevitably hide a range of increases and the residential sector, particularly HNW and listed properties, will be particularly vulnerable to even higher rates of build cost inflation,” said Will.

Protect your organisation from the consequences of underinsurance

Thanks to our partnership with rebuild cost experts, RebuildCostASSESSMENT.com, you can quickly discover whether your property is insured correctly. Contact us today for more information.

This article is from RebuildCostASSESSMENT.com.

What’s the difference between a labour only subcontractor (LOSC) and a bona fide subcontractor (BFSC)?

And when you need employers’ liability insurance.

What is a labour only subcontractor?

Labour only subcontractors are usually hired to assist with a build project when extra help is required.

Labour only subcontractors become part of your team and work under your supervision, using tools, equipment and materials provided by your business.

As they are employed for the duration of the build project, you are required to pay them the same wages as your full-time staff. You become responsible for their health and safety while they are at work. This includes making sure you have employers’ liability insurance.

What is a bona fide subcontractor?

Bona fide subcontractors are hired to complete a specific job—such as plumbing or electrical work—on a build project that your full-time staff is not capable of completing on its own. As your firm would be hiring them for a specific job, you would pay them as if it were a normal separate job, typically via invoice. In addition, because they are working independently of your firm, bona fide subcontractors should have their own liability insurance and invoices will include VAT.

Do I need employers’ liability insurance for contractors?

Employers’ liability insurance covers you in the event that one of your employees is injured or becomes ill due to the work they do for you and decides to make a claim against you.

In the majority of cases, employers’ liability insurance is a legal requirement if you have employees, this includes employees who work for you on a short term basis.

An exception to this rule is that you don’t need employers’ liability insurance if you only hire independent, self-employed bona fide subcontractors. So, check the criteria above to ensure you’re working with bona fide and not labour only subcontractors.

You do need employers’ liability insurance if you hire labour only subcontractors, even if you only hire them to assist you with one project.

Have you got it right?

If you’re unsure about employer’s liability insurance and the differences between labour only subcontractors and bona fide subcontractors, speak to your broker today for peace of mind.

FCA Policy Checker

Check if you’re likely to be covered

Clients with business interruption (BI) insurance can now refer to a policy checker provided by the Financial Conduct Authority (FCA).

Based on the outcome of the FCA test case, the online tool is a general guide aimed at assisting policyholders to see if their coronavirus-related BI losses are likely covered.

You can access the policy checker here. You will need to have your insurance policy schedule on hand.

According to the FCA website:

“The policy checker helps you to check whether the wording in your policy is the same as, or very similar to, the 21 policies in the ‘representative sample’ considered by the courts in the FCA’s test case.

“If so, the High Court and the Supreme Court rulings provide important guidance on the way your policy should be interpreted and on the strength of your claim, based wording of your policy.”

How to Avoid Underinsurance

Ensure you have the right amount of cover

Suitable insurance forms a vital part of business continuity planning – but how can you be sure that you are buying the right amount of cover?  Below we share some top tips from How to avoid underinsurance – A guide for small and medium-sized businesses produced by the British Insurance Brokers’ Association.

Top tips

  • Use professional valuation services to help you decide on your sums insured – useful information can be provided by your broker or insurer, or via http://abi.bcis.co.uk or www.rics.org/bcis. Regular valuations will help ensure the sums insured are correctly assessed.
  • Getting the numbers right when you buy your insurance policy will help avoid any inadequate sums insured becoming even less suitable year-on-year.
  • Sums insured for buildings should be based on the cost of rebuilding not the market value – particular features of your premises might affect the cost of reconstruction.
  • For business interruption consider buying declaration-linked insurance because it provides an uplift of 33%, providing that the sum insured and period of indemnity are both correct initially and declarations are made when requested by insurers.
  • When looking at business interruption insurance remember that accountancy and insurance policy definitions of annual gross profit are different. Make sure your assessment of gross profit matches the one in your policy.
  • When thinking about an indemnity period for business interruption covers, remember that 24 months is likely to be the minimum period needed for a business to fully recover its trading level and to rebuild its customer base.
  • Checking documentation is always a good idea; many insurers will make every effort to draw your attention to the important conditions of your policy but it is always important to check to make sure there are no errors.
  • Disaster recovery or business continuity plans may help you recover after a loss.
  • If you buy a simple online package policy check that the liability limits of indemnity, business interruption indemnity periods and other standard policy limits are sufficient.
  • Liability policies are complex. Make sure that you have considered the risk of claims against you and check whether you have taken on any liabilities under your terms of business contracts.
  • New risks sometimes emerge. Consider how the risks to your business change, including areas such as cyber risk or data protection.
  • The costs of claims preparation, such as the costs of instructing an expert or an accountant to help with the claim are not usually included in your insurance cover and may be costly; discuss with your broker whether you need to buy additional insurance to cover this.

As your broker, we can provide advice on how to assess sums insured and can help you to buy insurance cover that meets your needs.  Download the guide for more information on avoiding underinsurance or contact us today with any questions.