Warning on insurance cover

January 2, 2013 No Comments

63Restaurants face losing everything if they take out the wrong type of insurance cover or forget to give full details. Spice Business has received information from restaurants who report a substantial increase in restaurant insurance premiums over the past few years, including cover for both employer and product and for public liabilities.

However, there are some worrying cases where insurance agents go into restaurants and sell them policies at very competitive premiums, but they may forget to inform the owners of conditions which could catch them out later on. For example restaurants need to check, before they sign, if outside catering and delivery service are covered or not. Also does public liability cover the whole of the premises, including the front of the restaurant, the car park and so on. There can often be a lot of small print, with special conditions or endorsements, which have to be read and abided by; otherwise any claim might be void. Changes can also take place during the year and insurance companies have to be informed if any refurbishment or extensions take place.
The best advice is always take time to read all the conditions before signing, and make sure what is being offered meets the particular needs of the restaurant. If anything is not clear, always ask for clarification, in writing if possible. Don’t leave things to chance, because if something does happen, and it is not covered, then years of hard work can be quickly lost if the insurance does not pay up as expected.

Some of the most common areas in which people are inadequately covered include rebuild costs, fixtures and fittings, where the sums assured must be adequate. Under insurance in the event of a claim will lead the claim being averaged down by the degree of under insurance. According to Abdul Malique CeMap, Insurance Consultant, “The best advice is to use a rebuilding cost figure recommended by a chartered surveyor.” He added, “restaurateurs should be very careful with their insurance policy and ensure all the areas they think must be covered are taken into consideration before signing the cover.”

Any improvements made by tenants represent an element within the contents sum assured which needs to be separately covered with some insurers. Tenants improvements relates to all the decorative improvements to the building which have been undertaken by the occupying tenant and will not therefore be necessarily covered under the Landlords Building Insurance. If this is the case then separate cover may be required.

The majority of insurance companies require the extraction system to be serviced typically every 12 – 24 months and for the insured to have a record of it. Failure to provide documentation to demonstrate that it has been serviced may invalidate the policy or the claim.  Similarly the use of a deep fat fryer must be declared and proof of an annual service provided.

If a business has a flat roof then most insurance companies will require that this is maintained every 24 months. Failure to provide a record of this also may invalidate a claim in the event of a storm damage or ingress of water claim.

Property owners should arrange their own Property Owners (PO) policy, rather than allow the tenant to insure the building on their behalf by noting an interest on the tenants business policy. This arrangement does not compromise the landlord’s position in the event of a claim where the tenant has failed to meet the warranties criteria under the business policy and has therefore invalidated their business claim. If the landlord is insured under his or her own PO they would not be subject to the same warranties and conditions. This arrangement does cost more but better protects the property owners’ interest.

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