Our core experience in private rental accommodation and the expansion of our business operations has given us a great insight into other areas such as insurance. As we all know, insurance is one of those invaluable products we can be tempted to avoid/forget to “save money”. Unfortunately, as many people will find out the hard way this is a false economy and one which can prove to be extremely expensive. So, how can we help you with insurance cover for your business and your personal assets?
Cover first, cost later
While many people will look at the headline cost of for example basic property insurance and then look at the cover offered, this is the wrong way to do it. It is essential that you get the correct cover in place first of all, covering your particular circumstances, and then negotiate the best deal from there. In the past we have helped many clients improve their insurance cover and at the same time reduce their premiums. One example involved a client with a significant property portfolio who was paying £24,000 a year in premiums which didn’t even include legal cover. We managed to reduce the premiums to £16,000 a year but just as importantly, we increased the cover. More cover, lower premiums, the perfect combination.
Business and personal insurance
When dealing for the above client they also asked us to look at their home insurance to see if they had sufficient cover and were receiving value for money. The insurance broker involved had not even visited their home to itemise their belongings which included expensive artwork and quite a lot of jewellery. They were paying £3500 per annum for their home insurance but the insurer had no idea of the valuable items on the premises. As you can imagine, this was a potential disaster waiting to happen if they ever had to make a claim!
So, without increasing their premiums, we managed to extend their cover and itemise the various artworks, jewellery and expensive watches they owned. As it happened, some months later they were burgled and two expensive watches were stolen. Thankfully, the increased cover we had negotiated on their behalf allowed them to reclaim the value of the lost items in full.
Our letting agency insurance
The problem with legal claims is that even if you are successful in defending them there can still be a significant legal cost. As a consequence, with our letting agency we include legal cover thereby protecting landlords from frivolous tenant claims. For example, one tenant slipped and made a claim for personal injury compensation which was successfully defended by our solicitor. The cost of these legal services was paid out of our insurance cover.
Over the years we have come across numerous businesses that have either overlooked insurance cover for their businesses altogether or negotiated substandard cover. One such incident involved a company who were unaware that an employee had accumulated significant liabilities in the course of their work. When the issue was exposed and they were forced to address the liabilities the company founders discovered their professional indemnity insurance was not fit for purpose. As a consequence, the company was left with a £250,000 bill to cover the claim!
Unless you have the appropriate insurance cover in place it can prove extremely expensive to defend even frivolous claims let alone valid claims. In many cases innocent parties are advised to pay out early to avoid any additional costs despite the fact they had done nothing wrong. That can’t be right!
Many private landlords are quite rightly focused on building their businesses in the early days and don’t often take note of inheritance tax issues until further down the line. In these scenarios you will often find that many of the more significant opportunities to reduce future inheritance tax liabilities will have been missed. Yes, there are always ways and means of mitigating inheritance tax but the sooner you start to plan the better prepared you will be.
We recently worked with a client to reduce their inheritance tax bill on an estate worth in the region of £35 million. Using various financial tools we were able to mitigate their potential inheritance tax bill from circa £10 million down to nothing. Even though this did involve the introduction of a life insurance policy offering £4 million in cover (negotiated by us) it was still a significant reduction on their initial inheritance tax liability.
Over the years we have gained a range and depth of experience that we had never even considered when we set out on this journey. While we obviously specialise in private rental accommodation, our growing business has taken us into different areas such as finance and insurance. We are looking forward to sharing our experiences with you, receiving your questions and offering guidance on your journey.
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