Date: 04/03/2015 | By: Liz Painter

In our latest blog post, Select Member Andrew Phillips of Andrew Phillips Insurance Brokers talks about the challenges of relocating a multi-million pound medical sector business…

The Problem

Recently, we were approached by a client who had been “bursting at the seams” for several years and had been looking for alternative premises to buy.  After many months of searching, a suitable location was found and the purchase was agreed. The previous owner of the building, however, had gone into liquidation and the administrators needed to occupy part of the building for a few months to run down the old company.  Once this was completed, an extensive four-month refurbishment would need to commence; turning a two-storey call centre into a state-of-the-art medical facility.

Insurance Challenges

For this case, there were many risks we had to consider. Some were discounted but others needed specific insurance to be arranged.

1: The insurance for the building itself, from the initial purchase (with the administrator in occupation) throughout the refurbishment and up to the eventual occupation by our client. Typically, insurers are not attracted to buildings going through extensive building work – they can come with fire hazards, the possibility of burst pipes and they are often a common target for thieves looking for copper piping and other valuable building materials.

2: The contractors required a specific type of insurance in joint names with our client to cover all materials delivered to the site plus all installed works as they were incorporated.

3: We considered the financial risks to our client of major damage at the new site which might have delayed their moving schedule.  This included missing the opportunity to exit their existing lease (which would have committed them to paying rent for a further six months) plus the loss of their future anticipated growth in income.

4: The gradual introduction of expensive new equipment into the building.

5: Insuring the equipment and contents during the actual relocation by the removal company.

Our Solutions

We understood that it was critical to choose a flexible insurer for the building that would understand the various phases that the building would go through.  Detailed reports were prepared for several insurers to consider, discussions were held and terms were agreed with AXA Insurance. AXA also provided the Contract Works insurance to cover the materials on site and the works as they were incorporated into the building.

Whilst they had big growth plans for the business following the expansion, our client decided they would not make any significant loss if the new building was damaged and their move was subsequently delayed. As a result, no insurance was needed but at least they had considered the risks put to them. By keeping in regular contact, we were able to manage the insurance of new equipment being installed; making sure that everything was fully covered. Protecting our client at all times, we checked the removal company had adequate insurance cover – which it did.

With the relocation having been successfully completed, our client then took the opportunity to totally update their asset registers. By taking this step, our client is now covered for the full replacement costs of all contents and equipment, meaning that their sums insured will be adequate and they will not be penalised for being underinsured if they have to make a claim in the future. A full building revaluation was also undertaken so that all fixtures installed during the refurbishment were included in the new buildings sum insured.

Key Messages

● During the early planning stage of any major change, involve your insurance broker in the same way as you might an accountant or solicitor.

●Try to consider all possible “what if” scenarios, ideally using a risk assessment model.  Identify which of these can be insured and at what cost.

●Keep all channels of communication open.  Your broker is there to help and to make sure you are protected but they cannot do that without timely information.

Andrew Phillips runs Andrew Phillips Insurance Brokers, working with high-value home owners, businesses and medical sector clients to make sure they have the right cover in place. You can view Andrew’s profile or give him a call on 01527 306 041.