Information of our Office Closure and Insurance Policies

Information of our Office Closure and Insurance Policies

During the Covid-19 outbreak.  In view of Government Guidelines, Church Side Insurance staff will work from home until further notice.  We will have full access to our computer systems, and all our calls will be diverted to our advisors at home.  We hope this doesn’t cause you any problems, but we feel this is the correct and prudent course of action to take.

Please Call 01623 650232 or Email and we will be able to renew any policies, quote for new policies, take payments and deal with any of your claims….
Business is very much as usual over the phones and email.

Here at Church Side Insurance, we must ensure that the safety of our staff and customers is paramount when making any decision of this nature and hope that you agree.

Insurance policies and Covid-19

The following information is not intended to scare, but to inform and manage the expectations of business owners during this difficult time

All insurance companies have differing wordings that can also differ across product types.

The vast majority of Insurance Policies, for all industries, WILL NOT cover for the current outbreak.

We are seeing some Insurers wordings completely rule out any cover for ’emerging diseases’, some have a list of covered diseases, but as Covid-19 is a ‘Novel Virus’ it is not on any lists. We have found some polices will cover Business Interruption if a ‘Notifiable Disease’ is present on the premises (and in some cases within 25 miles) but as it is difficult to be tested under the current guide lines, it will also therefor be difficult to prove an individual has contracted the virus and also difficult to prove they were on the insured premises.

If we are able to demonstrate to insurers that a customer does qualify for a claim, we feel it could also be difficult to quantify losses.

Please see the following points taken from a post on the internet, they are not our words and in fact are quite ‘direct and unsympathetic’ but they do put the situation into simple perspective:
Simple Coronavirus Insurance Explanation!

  • Pandemic disease could be classed as an uninsurable risk. If insurers had to charge premiums to cover this risk, you simply could not afford them. They would run into hundreds of thousands of pounds, even millions!
  • Interruption insurance is an extension on a policy covering buildings and contents and only comes into play if the property is damaged by a range of “perils” such as Fire, Storm or Flood. Disease is usually not one of them (Refer 1 above)
  • If you are lucky enough to find a small disease extension on the interruption section of your policy, on an unspecified illness basis, it could in practice only pay for the loss of profit during the one week you need to close to deep clean them. Not your entire year of trading.
  • Liability policies by their very nature cover liabilities, not physical property, so there cannot be an extension to a section that does not exist. (Refer 2 above)
  • Insurers cannot compensate business for a “down turn” in trade, as that is a commercial risk of running a business, regardless of the reason for it.
    Insurers are NOT resourced in any way to pay for population level, pandemic events. Only governments have access to capital at this scale to compensate everyone at once.
  • As we referred to before, this information is not intended to scare, we are simply trying to manage peoples expectations in uncertain times.

There have already been some amazing stories of resilient business owners diversifying and finding new ways to continue trading during the outbreak. Also stories of communities rallying to help local business’ survive…. We are all in this together and we are all here to help where possible.

Please get in touch if you have any questions specific to your policy.

See the two links below for further information on advice for policy holders, issued by Marsh, and also how the government is helping us all in this crisis.

Government Information and Help

Advice for Policyholders

Please note this is an ever changing landscape and all information provided is believed true at the time of writing

An Insight into Warranty and Indemnity Insurance

What is Warranty and Indemnity Insurance (“W&II”) and is it right for my deal, when buying or selling a business?

In Mergers and Acquisitions (“M&A”) transactions a buyer will require the seller to make certain statements about the business being sold (warranties) or require the seller to promise to pay the buyer for any liability resulting out of a particular circumstance (indemnities). The idea being that, if a warranty statement is breached or the buyer suffers loss for which it is indemnified, the buyer can bring a claim against the seller for its loss.

W&II provides cover for losses arising out of those breaches of warranties and (in certain circumstances) indemnities.

A W&II policy can be taken out on either the seller-side or the buyer-side and the identity of the insured will affect how the policy operates.

A seller policy will cover the persons giving the warranties so that if a buyer brings a claim for breach of warranty/indemnity, the warrantors can turn to the W&II policy to cover any resulting liability (subject to certain exclusions and excess provisions).

A buyer policy will cover the buyer in the event that they have suffered a loss for something that would be a breach of warranty but the buyer cannot recover that loss from the warrantors (for example, where the warrantors have limited their liability to a certain level, the buyer can increase their warranty coverage through a claim against the W&II policy).

Regardless of which side takes out the W&II policy they are not designed to, so do not provide cover for, certain circumstances.

For example:

  • the buyer will still be expected by the insurer to carry out a thorough investigation into the target business and the seller will be expected to carry out a thorough disclosure process (where the seller notifies the buyer of any circumstances which would otherwise render a warranty statement untrue prior to completion so as to limit their liability under the warranties and enable the buyer to find out as much about the target business as possible);
  • forward-looking warranties (such as warranties about the ability of the buyer to collect the target’s receivables after completion);
  • issues which are already known by the insured i.e. known by the seller but not disclosed to the buyer in a seller-side policy, or disclosed to or discovered by the buyer as part of its investigations or the disclosure process in a buyer-side policy. Usually issues known to a buyer will instead be covered by an indemnity and in certain circumstances an insurer will be willing to provide cover for any liability arising out of that indemnity but, given the increased risk, the premiums and excesses tend to be higher;
  • price adjustments (such as a reduction in the purchase price due to the target business not having a specific level of working capital at completion); and
  • criminal fines and penalties (to the extent the law does not allow for them to be insured).

There has been a steady increase in the utilisation of W&II policies in recent years, resulting in more competition in the W&II market, lower premiums and more flexible policy terms. W&II is becoming a more commercially viable option.

Is W&II right for my deal?

If you are a potential seller of a business, W&II may be relevant:

1.   if you want or need access to the sale proceeds as soon as possible after completion. A W&II policy may enable you to distribute proceeds more quickly after the sale;

2.   If there are several sellers and the warranties are given on a joint and several basis.  The buyer may only seek remedy from one seller due to the inconvenience of trying to claim from a number of sellers, leaving the more accessible seller at risk;

3.   if you are providing warranties in your own name and want to protect your personal assets by limiting your potential exposure;

4.  as a tool to reduce your period of risk and/or to avoid placing a portion of the sales proceeds in an escrow account; and/or

5.  if you are concerned with the buyer’s history of bringing claims in similar transactions or a specific buyer’s litigious nature.

If you are a potential buyer of a business, W&II may be relevant if:

1.  you are taking part in a competitive bidding process for a business. Showing a willingness to move liability from the owners of the business to an insurance policy may make your bid more attractive to the seller;

2.  you want a higher level of warranty cover than the seller is prepared to give commercially;

3.  the private equity or venture capital seller are not giving warranties so warranties are being given by the target’s management team and limited to their own proceeds which is much lower than the overall deal value. The W&II policy can give you additional protection, over and above the cap imposed by the management team;

4.  the warranties are being given by the management team which is being kept on post-completion and you do not want to bring a claim against your own employees if a breach were to occur (please note that W&II cover that removes the warrantor’s liability altogether would result in higher premiums); and/or

5.  you are concerned with the seller’s ability to meet any liability for a warranty and/or indemnity claim.

Author Tughans, Marlborough House, 30 Victoria Street, Belfast BT1 3GG

Friends of Mansfield BID

Church Side Insurance become Friends Of Mansfield BID

When we moved out of the town centre we also moved out of the BID Designated area….We are really happy to be helping the BID and the businesses within the town centre again. We are working on special deals for insurance for Mansfield town centre businesses

Friends Of Mansfield BID Press release