Re: Motor Trade Insurance
Posted by Peter Warman on January 1, 2014, 12:31 pm, in reply to "Re: Motor Trade Insurance"
Hi Andrew |
I have posted the email that I received from the insurance underwriter
My original email was to my broker who forwarded the query onto the underwriter, the reply below is from the underwriter back to the broker and me, hence the insurance jargon
My original question was: I was asking if I would be covered for remapping for performance and removal of the DPF's and failing MOT's in February
Is my interpretation correct?
"The remapping risk I did with Arista (Austec) was all about fuel consumption and
efficiency, the output was slightly different but the insurance process is similar.
Couple of things spring to mind here:
PL / Servicing indemnity - You will need to amend the business description / and
advise the point about the MOT (I assume MOT cover included under NIG policy) - this
will pick up TPPD &/or injury following an element of defective workmanship on this
front - however I imagine there will be a financial cost exclusion somewhere in
there. Check the wording it may not, if it doesnít then that's really good and you
need to promote that with the client - for me defective workmanship is a Financial
loss cover pure and simple , any injury / damage / loss of life is a TPPD claim and
subject to the business description being correct (i.e. Mapping for the purposes of
Performance included) I cant see an issue on the liability side, itís the financial
loss element you need to consider.
Financial loss element are broken down in two areas:
Costs to insured for rectification / defective products &/or services
Third Party Financial loss - following either Defective workmanship (both products
and services) and following poor design / advice or implementation.
Lets explore those further.
Product Recall - Currently a PI policy nor a PL policy will cover the INSURED's or
Third Party cost of rectifying the faulty service provided - for example going out
and replacing all the faulty units - this is if you a like a parent DE cover.......
It gets even trickier in a min so hold tight.
Professional Indemnity - This is your financial loss element following poor design /
advice or Errors / Omissions following that faulty design /advice, it doesnít cover
Fin Loss following defective workmanship........so if the units have a design
implementation issue, Third Party financial loss is covered and in some cases will
pick up the rectification works, however the more likely scenario is the units are
installed incorrectly , that's product recall on the financial side, and PL on the
injury side (subject to insurers acceptance of the revised business description)
Certainly as far as cover goes, no cover doesnít exist at present, so we need to
review / amend according to the client's request.
Peter - I have copied you in so you can see the process involved here sir.
Re-mapping is a relatively new exposure (as far as insurers go - remember the long
tail element to them is defined by application of service, losses occur, they go
through the courts and the claims are paid) so it takes an insurer longer than the
customer (you) to experience the trends of losses etc.
I know RSA were significantly burnt in the early days on these risks, probably
didnít know what they were getting into before it was to late.
That being said we do and have done these risks in the past, granted normally the
other way for fuel efficiency etc., but for me the process is still the same.
It really depends how far you wish to go with it Peter, currently your not covered
(liability only basis) for the works, but that's simply a business description issue
with NIG should they agree. The tricky part is working out from your customer base /
staff experiences & skills where you wish to place your hat in terms of cover.
The above blueprint outlines the belt and britches attitude, as you would expect
from a broker / insurer but we accept that if you only do an handful of Re-mapping
jobs then itís a mute point. That being said Financial lines claims (such as product
recall & Professional indemnity) are at a record high currently so we need your
input on this one Peter.
If re-mapping is to be a cornerstone of your business then we need a sit down
really, if it's a general question then the answer is above.
I'm happy to discus directly if you wish to give me a call on the mobile. There's
certainly some areas to consider, but frankly if you talking about financial loss /
rectification then Public / Products liability doesnít go far enough."