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Insurance solutions: May 2013

May 2013: Gift Focus readers put their insurance queries, concerns and questions to leading brokers T.H. March

Q: What is target stock? This term is mentioned in my insurance policy and I'm not quite sure what it means.
A: Quite simply, the term target stock can refer to any stock that is attractive to a thief. This can include (but is not limited to) jewellery, watches, precious metals, compact discs, electrical goods including computers, furs, clothing, cigarettes and alcohol. Not all insurers specify the same stock type as 'target', so if you are in any doubt at all you must ask your insurer or broker for clarification.

To ensure that you have adequate insurance cover, it's essential that you declare any target stock you may hold. If you don't disclose details about your stock, any claim you make may not be met.

Q: My stock levels fluctuate throughout the year; do I need to tell my insurer?
A: Most, if not all, policies available today will state that if a claim is made and it's found that the covering sum is not sufficient for the valuables at risk, any claim payable will be reduced by the same percentage as that of the under insurance.

Make sure that your stock levels don't exceed the sum insured on your policy. An alternative is to have your policy arranged on a stock declaration basis. Under this system, a maximum sum insured is set at the beginning of the policy period and every month a declaration is sent to your insurer stating what the stock figure was for the preceding month. At the end of the policy period the stock figures are reviewed and a return premium or additional premium is charged depending on the average levels held.

Q: Am I correct in thinking that I need to insure my premises to the market value?
A: In a word, no! Correctly arranged insurance protection for your buildings should be based on the rebuilding value, not the market value. The sum calculated for buildings cover under a commercial policy is based on the full rebuilding cost of the premises rather than the market value. There is no relationship between the two. It's also important to review the re-building value on a regular basis to take into account inflation and any improvements that may have been made to the building. Many insurers include an index linking provision within their policies; the sum insured is increased on a yearly basis to take into account rises in inflation. It's important that this figure is correct to start with. To obtain a rebuilding value, contact your local qualified chartered surveyor. By arranging your policy on the correct basis, you will be saving a considerable amount of money in most cases. One important point to bear in mind however is if your building is listed, because the rebuilding value may well be more than the market value!

Q: What is the minimum security condition within a policy?
A: Most, if not all, insurers that provide cover for business premises impose a minimum level of security within their policy wordings. This condition will require that certain types of lock are fitted to the final entry/exit doors and windows, and in certain cases, a specific type of alarm with a number of features amongst other security requirements. A copy of the particular insurer's standard can be requested when a quotation is provided. It's very important you comply with the conditions.

Q: What points should I consider when choosing a policy to cover myself or a family member in the event of illness?
A: When you're fit and healthy it's difficult to tell what you or your business might need, or how you'd feel if you were diagnosed with a critical illness or suffered a long term disability. It's even more difficult to imagine what would be happening if you had died. It may be an uncomfortable exercise, but it's worth looking at a worst-case scenario. You might want to know that any borrowings can be paid off, that your business can continue to trade and make money, and more importantly that your family will be able to pay the bills.

Take advice to make sure your cover has been correctly arranged and will give the right people the right amount of money at the right time. Also, make sure you have a will and that it's up to date.

Further information:
T.H. March is a chartered firm of insurance brokers. Established in 1887, the company has offices in London, Birmingham, Manchester, Glasgow and Sevenoaks, as well as its National Administration Centre in Yelverton near Plymouth. To find out more T: +44 (0)1822 855 555, E: giftware@thmarch.co.uk, or visit the website www.thmarch.co.uk

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