Large amounts of paper, hot machinery and flammable liquids make, after all, for a combustible combination.
But even with the occupational hazards of the trade, printers haven’t always got it completely spot-on when buying their insurance. "Historically, printers have probably not been very good at having the right levels of insurance," says Paul Sims, commercial underwriting director of Aqua Underwriting. "But with the help of specialist brokers and the recent development of print policies, awareness is much greater than it was," he adds, more encouragingly.
Nonetheless, figures from the Association of British Insurers make for sobering reading: 80% of businesses which suffer a major incident like a fire or flood fail within a year. So making sure that sufficient cover is in place should the worst happen is crucial. "Unless the policy provides adequate business interruption cover for the correct indemnity period, the claimant will more than likely never recover to anywhere near the financial position they were in before the loss," says Sims.
Tyrone Spence, former managing director of Hemel Hempstead-based printer Colourquest and now managing director of new print outfit E.Com 2, would certainly agree with the importance of getting this indemnity period right. Colourquest suffered severe damage in 2005 as a result of the explosion at the nearby Buncefield oil refinery. The company’s premises had to be demolished and rebuilt, with the claims process taking around 18 months to tie up. As a result of this experience, Spence advises: "I would certainly recommend taking up an option to extend the indemnity period longer than the standard 12 months."
A further insurance policy ‘must’ for many, is loss of earnings cover. Ellesmere Port-based Toucan Images, a small printer of gifts and goods, discovered the importance of this the hard way when it was broken into by burglars earlier this year. They made off with pretty much anything that wasn’t nailed down. "In less than 15 minutes, they’d nearly destroyed five years of hard work," recalls company boss Chris Reagan. "The break-in nearly sent us bust."
Only three employees in size, Toucan Images just hadn’t got around to thinking about the finer details of its insurance cover. "With these sorts of things, you act on previous experience – we’ve been where we are for five years and have never had any problems before. You tend to just think that burglaries are things that happen to other people," says Reagan, who had very little experience of dealing with insurance claims.
Costly decision
With the computers and machinery gone, the business went six and a half weeks without operation. And unfortunately, Reagan had declined to take up a loss of earnings option on Toucan’s policy, which would have cost around £20 extra. With no way of generating income in the aftermath of the break-in, it cost the company dearly. "Just ticking a box could have saved us about £7,000 to £8,000 in the long term," says Reagan. "It’ll take us a year to get back to where we were before. Every day that went by after the break-in, we were pouring money out of the business. We were losing customers because we couldn’t fulfil orders. Luckily, our policy had an annual increase in value – otherwise we would have been £5,000 down."
So just where might printers find the kind of policy that will help them avoid these kinds of losses? For the BPIF, a print-specific policy is often a good shout. Steve Walker, commercial product manager at the BPIF, believes that printers would do well to consider a policy with Aqua, the underwriter for RKH Group, the BPIF’s recommended insurance partner since 1988.
"It offers print-specific policy extensions that would be more expensive to get on other policies, such as bookbinders extension, injury caused by inching and crawling or legal cover for libel," says Walker. "No company can guarantee to be the cheapest every time, but they give members a discount and very often save printers 20% to 30% on their existing policy."
Of course getting a good deal on insurance is often not only about getting the right cover in the first place, but fighting your case should you need to fall back on this cover. For this reason, getting a policy that offers the option of appointing your own adjuster to fight your corner when making a claim, can often make a big difference to your final pay-out, not to mention saving you a few grey hairs. "We appointed a firm to work on our behalf, and it took a lot of effort and energy out of the process," reports Tyrone Spence.
Spence also advocates the value of a good broker relationship. While insurance brokers are becoming something of an endangered species for personal policies, they still have a role to play for niche business sectors such as print, he says. "I think there’s still value in considering brokers because of the relationship they have with insurance companies," he says
Having firsthand experience of the value of the broker, Kieran O’Connor, finance director at Welsh firm Cambrian Printers, agrees. In June 2012, flash floods left 18 inches of water sloshing around the firm’s Aberystwyth headquarters, forcing managing director Doug Gray to curtail a holiday and get on the first plane back to Britain.
While you’d be forgiven for thinking that O’Connor would look back on the incident with horror, he’s remarkably upbeat about it – thanks in no small part to how well the multimillion-pound claim with Allianz was handled by Cambrian’s broker, Thomas Carroll of Caerphilly. "I honestly wouldn’t mind too much if we were flooded again," recalls O’Connor, perhaps only half-jokingly. "Thomas Carroll were absolutely brilliant. They were at the facility at 10am Monday morning and started dealing with the insurer immediately."
Orders were subcontracted, staff were sent to oversee operations, and the presses were back up and running within six weeks (the occasion was marked by a grand bash on the Thames in London). "Even after the flood our premiums haven’t gone up too dramatically," says O’Connor.
Broker benefits
So while most of us may arrange our car or home insurance on the internet once a year and then hope that we’ll never have to look at it again for the next 12 months, having a rather closer relationship with your insurer or broker can make all the difference.
"About six weeks before renewal, the broker will come and visit and ask us our plans for the next year – asking about turnover, margin, and the value of our machinery. It’ll be a meeting of four or five hours. They’ll then go and find the most economical policy for our needs," says O’Connor.
There are, however, some areas that the printer must still take responsibility for themselves. The main thing printers must be wary of is invalidating their cover through careless day-to-day actions. Insurance companies have a tendency to catch firms out with niggling terms, conditions or technicalities – we’ve all heard stories of flood claims being thrown out because the fire extinguishers weren’t correctly set up, or similar.
The common policy conditions for printers relate to how waste is stored and collected, when alarms are set, how stock and flammable liquids are stored, and the accessibility (or otherwise) of windows. If the conditions aren’t adhered to, then you’re likely to encounter some issues if you need to claim – even if your claim is unrelated to those conditions.
Sourcing the right cover is a delicate process requiring careful thought not only in researching the best kind of policy and the best kind of assistance to enlist, but in obeying any terms and conditions that will ensure its validity. While smaller printers may be tempted to demote insurance cover to the bottom of their priority lists, they do so at their peril. Companies with limited time, energy and resources may feel they can’t afford to invest time here. But they may one day discover they can ill-afford not to.
Getting insurance right
Shop around Don’t just accept the first quote you’re given, but remember that the cheapest quote might not always be the best for your needs. When it comes to renewal, consider if the insurance that you bought last year meets your needs now
Specialist expertise Think carefully about the policy options and how they apply to your business. An off-the-shelf policy might not meet the demands of the trade, so consider a policy with a specialist, or going with a broker with previous experience in working with printers
Value for money? It’s essential that you make accurate valuations of not only your machinery and IT equipment, but items like carpets, too. Some loss adjusters will not count these as permanent fixtures or fittings, which could leave your business out of pocket in the event of a claim
At a loss Spending a little bit extra for the business interruption cover option might make the difference between bouncing back and going to the wall. Claims can take a long time to resolve, so consider taking out a longer indemnity period
Exclusions, exclusions, exclusions Make sure that you’re totally aware of the ins and outs of your insurance – even if it means dedicating an hour or two to really getting to grips with your policy
Good housekeeping Keeping up your part of the insurance agreement is an ongoing process, which means that any instructions on storage, waste, windows, and safety cited in your policy need to be observed
