Insurance News Archive
The Deepwater Rig Disaster
The scale was enormous but environmental damage could equally destroy smaller businesses.
A year ago, it would have been inconceivable that BP, the largest British listed company could face financial meltdown in the next 12 months. Yet, for a period in the early summer, there were doubts whether the business could survive the disastrous oil leakage in the Gulf of Mexico. The costs of the disaster covering the rig itself clean up costs and potential loss of profits and compensation claims, threatened to overwhelm the company. Strict liability for environmental damage meant that, initially, BP has to bear all the costs before it can begin to try to recover some from other parties. There are still threats of criminal prosecutions and huge fines. There was enormous damage to the reputation of the business that, even now, could have far reaching consequences for the future of the business. The total economic loss for BP could still be $50bn and whilst it will now survive, the business will never be the same.BP may have limited insurance cover but the vast amount of the loss has had to be borne by them.
The scale of the event is mind blowing but is a lesson for all businesses, especially those who handle or store substances that can cause pollution or occupy premises where a previous usage may still cause problems. A business that causes environmental damage is strictly liable in the UK without any defence. The maxim is ‘the polluter pays’. Whilst a loss on the scale of BP is inconceivable, businesses can still face huge costs if they cause pollution. Insurance cover under normal policies may be limited. Any claims arising out of a gradual pollution is unlikely to be covered and whilst Liability policies may cover sudden and unforeseen pollution, cover could be limited for clean up and any potential financial claims. Policies may be in place to cover any prosecution costs but not any fines imposed.
There are specialist covers available for environmental impairment risks and these should be considered for any business where a potential hazard exists. BP may be an extreme example but a small company could be equally threatened as a result of a leaking tank, an unfortunate spillage or a long forgotten disposal of materials which were considered harmless then but now regarded as toxic.
We have been suffered some of the worst UK weather conditions ever experienced, with temperatures in parts reaching as low as minus 23 degrees. With a spate of burst pipe claims to be expected we believe it would be useful to pass on some advice to pass about how to cope with any resulting damage.
Dealing with Burst Pipes
Burst pipes are classed as water emergencies and they can cause serious damage to a home’s orbusiness premise’s structure and electrical wiring. Upon discovering a burst pipe the following remedial steps are recommended.
1. Turn off the water supply
A professional must be called in if electrical wiring becomes damaged by water.
19 January 2010
A FRIENDLY REMINDER - HELP US TO HELP YOU
Brokers exist to help their clients but to give the very best service, we need help from our clients too.
Something unexpected - a bad debt, floods, one of a dozen perils or a major lawsuit - could damage or even destroy your business.
Sadly when the general economy is struggling, businesses are even more at risk from legal action and claims.
To help you, your broker must be made aware as soon as possible of all relevant changes in your business in order to avoid last-minute panics.
The prompt provision of key information should ensure that no final decisions need to be taken before you fully understand their likely impact on risks and insurance premiums.
In any of the following cases, one quick call to a broker could save money and prevent expensive mistakes.
Buying a business
The broker should be involved in the due diligence process. A detailed examination of the business is all the more important at a time of rising premiums. There may also be undisclosed liabilities or particular areas of business that will prove hard to cover at a reasonable price.
Selling a business
The impact of disposing of a business on your existing insurance programme could be unexpected and extreme. Cover may be necessary to protect against late-reported claims. Sometimes 'hold harmless' agreements - indemnities or warranties against unforeseen past losses that suddenly surface - may leave liabilities which call for extra insurance.
Buying and building new premises, moving or extending existing premises
Sometimes these will be unsuitable for the use you intend. Insurers may ask for costly improvements, such as fire doors and security equipment, and architects may not fully appreciate what’ the insurers require. Small changes to the plans in advance could substantially reduce premiums.
New contracts and developments
Any new contracts could affect your insurance programme by introducing new risks that require cover and management. Wherever possible, these should be assessed by a broker before any documents are signed.
Entering new markets and launching new products
Insuring exports to some countries can prove expensive, and the supply of goods or services to particular sectors may bring insurance problems. New products or service may also have a fundamental impact on your insurance arrangements. The broker should be involved in the evaluation process.
Police withdrawing support
The police sometimes withdraw support for monitoring alarm calls. It is vital that you inform your broker immediately as cover is unlikely to operate.
Taking on major new suppliers and customers
New contracts may impose extra liabilities as well as adding to the risks your business must consider.
New plant and equipment
Existing insurance may be inadequate and special cover could be necessary. A new process could mean an increase in premiums or breach a condition in your current policy.
New drivers or cars
Employing a young driver or purchasing an expensive or valuable vehicle could affect your motor fleet insurance. It’s wise to discuss changes in recruitment and vehicle policies in advance. Help us to do an even better job. Keep us informed.
Call Stephen Hegarty at BJP Insurance Brokers for better cover at lower prices and to discuss all your insurance needs on 0118 979 2121.
15 December 2009