insurance considerations, perils and pitfalls
TRANSCRIPT
COMMUNITY ASSET MANAGEMENT
INSURANCE CONSIDERATIONS
PERILS & PITFALLS
Euan Drysdale – Keegan & Pennykid
BASIS OF THE ASSET TRANSFER
There are a variety of ways that the management of the assets may be transferred, ranging from a “Management Agreement” through to full transfer of ownership.
It’s essential that you clearly understand the basis on which you’ll proceed and the respective party responsibilities.
OPTIONS
1. Management Fee paid for the running of the asset, Local Authority retaining ownership & control of the Asset.
2. Assets leased to local Community to operate and provide facilities, Local Authority retaining Insurance responsibility for the Heritable Asset – the building(s).
OPTIONS
3. Asset leased to local Community with full responsibility for maintenance and Insurance of all the assets.
4. Full transfer of ownership of all the Assets to the local Community, thereby passing on full responsibility for all the Insurance requirements.
THE BUSINESS MODEL
Depending on which of the business models is
used, will determine the Community’s basic
Insurance responsibilities and any residual
control by the Local Authority or other
bodies.
OPTION 1
The Community will need to arrange their
Insurances to cover the operational risks but will
probably need these to tie in to some extent with
requirements laid down by the ceding Authority.
OPTION 2
Again the Community will principally have to cover their operational risks, but depending on the arrangement may become responsible for the Insurance of operational plant, equipment and fixtures and fittings.
This might be by a full transfer of ownership or a lease agreement.
OPTION 3
The Community will be obliged to Insure all the assets under the terms of the lease with the interest of the Local Authority noted in the Insurance.
If the Authority insists on a policy in joint names then it should be kept separate from the policy effected for the operational risks –WHY?.
OPTION 4
A full transfer of the assets will oblige the
Community to effect Insurance for ALL the
assets and operational risks and they will have
to ensure that they can sustain the business.
PRINCIPAL RISKS
Loss or Damage to the Buildings.Loss or Damage to Contents, Plant,
Machinery etc.Business Continuity following a loss.Liabilities – To the Public, To Staff and
Volunteers.Governance risks – Management and
Employment Practises Liabilities.
BUILDINGS
If leased, this will be the key document in determining the extent of cover that you’ll need if any.
Are the Buildings “Listed”?Importance of getting the Reinstatement
Value right.Taking account of VAT.
CONTENTS & OTHER PROPERTY
Ensure that you have an up to date asset register that shows current Replacement values.
Security & Protection considerations.
PUBLIC LIABILITY
What considerations do you need to take into account in setting the Limit of Indemnity ?
What about Local Authority stipulations in any leasing agreement?
Are there any particular additional risks that need consideration in selecting the cover?
ABUSE
What will you need to demonstrate to ensure that you have appropriate cover for the risk of allegations of “Abuse” made against the Organisation?
There are considerable differences in the way in which different Insurers may approach this risk and provide cover – Be Aware!
EMPLOYERS’ LIABILITY
Will be required even if you run entirely with Volunteers.
Appropriate Risk Assessments will be essential.
Specific training may be required for certain tasks.
What about protective clothing & equipment?
EMPLOYMENT PRACTISES LIABILITY
Exactly what does this cover?How does it differ from ordinary “Legal
Expenses Insurance”?What are the benefits over Legal Expenses
type covers? Can you afford NOT to have it?
MANAGEMENT LIABILITY
Cover for Trustees, Directors & Officers of the Organisation.
There is a personal “Duty of Care” implicit in the running of the Organisation.
Principally covers the “Governance” risks since the personal assets of Trustees, Directors or Officers may be at risk.
OTHER CONSIDERATIONS
You may need to consider other types of cover depending on the nature of your activities. For Example:-
Pensions. Engineering Inspections.Fidelity Insurance.
CONTACT DETAILS
Keegan & Pennykid (Insurance Brokers) Ltd.
50 Queen Street
Edinburgh EH2 3NS
Telephone: 0131 225 6005
E-Mail: [email protected]
Website: www.keegan-pennykid.com