As you would expect, there’s been a great deal of uncertainty due to the impact of COVID-19/Coronavirus. To help provide some additional insight and information, we have prepared some answers below based on frequently asked questions we’ve been receiving.
Please note that this should be regarded as general advice only, and we would strongly encourage you to call us to discuss your specific situation before making any decisions about your insurance solution or risk management programme.
My annual corporate travel is up for renewal soon, what should I do?
Once COVID-19 was considered a ‘known risk’ the initial questions were around whether clients were covered or not, but now that we’ve assisted with most of those claims and queries, the questions have turned more towards what’s next.
So, should you renew your corporate travel given the current travel ban? In most circumstances, we’ve been encouraging clients to renew because at this point we don’t know what altered terms, conditions or exclusions insurers will placing on policies in the future.
Right now, we’re still in a position where we can secure minimum premium cover. If clients make the choice to cancel or not renew their policy and then subsequently attempt to take out the cover later in the year, we can’t guarantee what exclusions might be implemented or what premiums will be charged.
As an alternative, we’re suggesting the policy be changed to only provide cover for the minimum number of trips, and then if there’s a change our clients can simply advise us.
Can I cut some of my insurance covers?
In short, it depends on the class of insurance. An individual conversation needs to be had before taking action as it depends on your needs and obligations.
Take for example buildings and assets. If you still own your buildings and you still have your assets, then we wouldn’t recommend cutting your cover because you’re still at risk for fire, burglary, theft. In some cases, like burglary, the risk may be increased if the premises is often unattended these days.
Another important point is to be aware of your unoccupancy clause in your policy. Most policies will vary anywhere from 30-90+ days, and in most cases, insurers are providing some latitude given the circumstances, but you are still obliged to advise if your property is going to be unoccupied for an extended period of time.
What about the interruption or loss of profits cover that’s part of business insurance – can I adjust that now that my revenue has decreased?
It’s important to note that most business interruption policies include an adjustment clause, which means at the end of the period of insurance, if your turnover and profit didn’t achieve what it was insured for, you get a premium return at the end of the year anyway.
If you change your cover now, it will have a significant impact on the value of your claim if you were to have a loss. If you reduce your cover now, to your turnover now, and you have a loss next week then that’s all you’ll get paid, even if the lockdown gets lifted in a month’s time. Your business could have gone back to where it was, but you won’t have cover for that growth/recovery because we’ll have reduced it. Industry thought leader Professor Allan Manning put together a good working example here to help get your head around it.
Again – every single client scenario is different, and our advice for each client would be different, so please, we would re-emphasis that you ring us to discuss your situation if you have concerns.
Can I reduce the cover on my motor vehicles because I’m not driving them as much?
The key words here are ‘as much’. The answer is, if your vehicle is under finance, you probably have an obligation to insure for full comprehensive cover. If your vehicle is worth only a few thousand dollars, you could potentially reduce the cover to third party, fire and theft, but be warned this does not cover malicious damage, your own impact damage, hail or storm damage.
Some insurers are offering ‘lay-up’ cover for commercial vehicles. But they do come with strict requirements and conditions. Please contact us if you have commercial vehicles not being used for an extended period of time. This is a specific area where you may be able to achieve cost savings.
And last but certainly not least, what are the people risks associated with COVID-19?
There are unique and increased risks with remote working and working from home. There are reports of increased malicious cyber activity on top of the challenges with systems and connectivity. The Australian Cyber Security Centre has provided the latest advice (including for working from home and small business protection) here.
You are also still obligated to provide a safe work environment for staff which includes their working from home set up. Check the Safe Work Australia website for the resources they have about how to make sure your team has a safe work from home space.
One frequently asked question we have for clients is ‘Does your business have a plan if your staff contracts COVID-19?’
This is particularly relevant to manufacturing businesses, who still have a concentration of staff working onsite. Many savvy businesses are already running split shifts, so if someone on one shift got sick, there would still be another unexposed shift to continue operations while the others isolate/quarantine.
We’re consulting to a number of existing clients on their financial risk management to ensure they navigate this period as successfully and prudently as they can. We encourage you to reach out if you have specific questions relating to your industry current circumstances. Contact us to have a chat or make an appointment.