Over the last decade or so I have been advising media companies, I have seen some sweeping changes in the technology used in cameras and lenses and the output that they can produce.
The move from film to digital, Standard Definition to High-Definition, 3D, 4K, HDR and 360/VR/AR has meant that the amount of now-redundant kit in your store could be mounting.
From an insurance perspective, more expensive kit = higher sums insured = higher premiums. You can offset these costs if you box clever, but be warned – you may not want to, as there is always a trade-off to be had!
Most businesses I deal with insure their kit for the full replacement value (as new), which is arguably the most sensible thing to do.
However, it is possible to cut your insurance bill by using one of the following two technique.
1: Don’t insure everything you have
Most insurance policies state that if you are under-insured, then any claim you make will be reduced by the same percentage you are under-insured by. We call this ‘Average’. If you choose not to insure older equipment, you can remove it from your policy AS LONG AS YOUR INSURER IS CLEAR ON WHAT THEY ARE, AND ARE NOT, INSURING.
You can avoid Average by either providing a list of kit you want cover for (making sure everything is included and remembering that you will need to update this every time you purchase a new piece of kit), or by listing those that you don’t want cover for (which may be safer).
This will have the effect of reducing your overall sum insured, which should result in a lower premium. The trade-offs here are (a) there is a bit of effort to make sure that your list is correct, unambiguous and maintained, and (b) should that old bit of kit be stolen or damaged, you have no right to claim and will have to bear the loss yourself.
2: Insure older kit on its second-hand replacement value
Rather than completely removing older equipment from your policy, you could insure it on its second-hand value. To prevent ‘Average’, you’’ll need to provide a list of the equipment insured on this basis, but the upshot should be to reduce your sum insured, and therefore your premium. Everything else you own can be covered for the new replacement value, as usual.
The draw back on this approach is two-fold. Firstly, arriving at an initial value can be tricky, as it is dictated by the current market forces and the condition of your kit. Secondly, and very importantly, in the event of a claim for the equipment, you will need to be able to demonstrate the second-hand value AT THE TIME OF THE LOSS, which may have significantly changed (in either direction) since you first insured it. This could leave you out of pocket, if the value has increased, or feeling like you’ve been short-changed, if the value has decreased.
Negotiations with the insurance company could be required in the event of a loss and may not always fall in your favour.
Whatever your circumstances, there are always possibilities to consider.
If you would like to learn more about your insurance options, give me a call on 07983 741101, or drop me an email at firstname.lastname@example.org and I’ll explore these for you.
Andrew Leen, www.mediaroo-insurance.co.uk