Motor fleet insurance and risk management specialist Gauntlet has highlighted worrying cases of underinsurance within the haulage and transport sector.
Whilst quoting for insurance in recent months, Gauntlet has discovered various instances in which insurance claims would have been declined because the fleet was not adequately protected.
In these cases, the underinsured businesses had grown, or changed the nature of their business. The incumbent insurance brokers, rather than asking pertinent questions about the fleet and business operation, had simply renewed the policy based on the original information supplied by the client a few years earlier.
Even more alarmingly, in some instances, the brokers knew of the changes, but had not wished to break the news of a significantly higher premium to pay, in order to adequately protect the business.
In one case, where the client had expected to pay a premium of £1700, Gauntlet won the business, having quoted £5000. Its professional advisers recognised severe underinsurance in terms of the freight liability of the goods in transit, which were incorrectly insured.
Gauntlet director and head of motor fleet division, Ian McCarron, said: “We are discovering an increasing number of instances of underinsurance in cases where other brokers have not examined the fleet business in-depth and have quoted on historic information, rather than current scenarios. Although clients, in these instances, are shocked at having to pay more, they recognise that a policy that is not based on the true material facts relating to the risk, is of no use whatsoever. Being underinsured is commercial suicide, particularly in a sector that is high-risk anyway and where a claim is only one driver mistake, theft, or arson attack away.
“Fleet managers need to ensure their insurance premiums are based on current situations. If not, they could suffer a rather rude awakening when they come to make a claim.”