I recall having a conversation with a client about his film risk, years ago, that went something like this:
Me: “So when you are filming on location, what risk assessments do you carry out?”
Client: “I don’t do risk assessments, because I don’t think we do anything risky”
Me: “But how do you know that, if you’re not assessing the risk? What if something goes wrong?”
Client: “Well, that’s what we have insurance for!”
Erm. No. Not exactly.
I always advise my clients that insurance is your last line of defence. Think of it as your safety net when everything else fails.
As a policyholder, a business owner, or a freelancer, you have a responsibility to act reasonably to avoid a claim happening in the first place. That’s your first line of defence.
The comment above is a bit like leaving your car running with the keys in the ignition and the doors open. What if someone steals it? Thinking “That’s what I have insurance for” won’t actually help here, as your insurance policy will probably exclude such a scenario.
Insurance policies state that the policyholder must act in a certain way, or perhaps do certain things (like lock your premises when you leave in the evening) to minimise the likelihood of a loss or damage occurring.
These are sometimes called “Conditions” or “Conditions Precedent to Liability”. If you don’t follow these, then your insurance may not operate. They are not there to ‘catch you out’, they are there as the best way of protecting your business.
As an Employer (if you are), you know that you must provide a safe working environment for your staff and that you have a duty of care towards them in law.
Boss: “John, walk across that tightrope over the lava field and fetch me that huge, bulky, difficult-to-carry weighty object, and bring it back to me”
John: “but what if I fall off the rope and injure myself, or even worse, die?”
Boss: “It’s okay John, that’s what we have insurance for”
Okay, so I’ve taken that to the extreme, but hopefully you get the point.
“Even a simple plan is better than no plan at all”
If we consider something like a fire at your premises, then your first line of defence should be your own internal processes and procedures. Something like:
- All combustible waste to be removed from the premises at the end of the day.
- Fire extinguishers to be maintained.
- Smoke detectors to be routinely checked.
- Any work involving heat to be carried out in (location) and protective equipment to be worn.
In fact, these could be anything that minimises the risk of a fire occurring in the first instance. Some insurance policies may have these included in your policy wording as conditions for you to follow, because they make sense.
Your second line of defence for your business should be around what to do if a fire actually breaks out:
- Training on using fire extinguishers and appointment of a fire officer for the premises.
- Who to call to report the fire.
- Evacuation procedures.
- Business continuity – where to relocate to, how to reinstall backups, phone lines, redirect post, etc, etc.
There may be other considerations to be made around this scenario, and I’ve seen some really good plans, and some very simple ones. And even a simple plan is better than no plan at all.
These usually won’t be conditions in your policy, but are important considerations to make, and may make a difference to the underwriter who is rating your policy – so do mention them, as every piece of positive information can have an impact.
After all these have been considered and followed, should the worse happen then you still have your safety net – your insurance policy.
If you have the right cover in place, then your insurance policy can provide the funds to meet the repairs required to your premises and your equipment. It could meet the additional costs of relocating to another site and cover the cost of reinstating your data. It may also (again, if you have the right cover) meet any reduction in revenue that your business may have suffered as a result of the fire. As any high wire performer will tell you – always make sure you have a really good safety net.
Planning for these situations should go some way to protecting your business in the first instance. From experience, even if you have the most robust processes and procedures in place and follow them to the letter, things can still go wrong.
That’s what you have insurance for.