According to the Government
As it happens we totally agree with them, however before we all rush off and send our goods all over the world we need to consider how insurance works when we export.
Covers such as Public & Product Liability Insurance, Business Interruption, or perhaps Marine Insurance, can all be affected if you export. Speaking to a broker who understands these covers is essential. Getting your products to your customer is paramount, but covering your losses should it all go wrong is a must.
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If you are already manufacturing the chances are that you will have a lot of the insurance covers an exporter would need, however, it may need tweaking a little.
Let’s assume that you already have insurance in place as a manufacturer, if this is the case then you will most likely have in place insurance called Commercial Combined, Business Package or something along those lines.
Irrespective of what it’s called the cover provided will be giving you insurance at your premises, covering your machinery, business fixtures and fittings, your computers – in general your contents.
Hopefully you will have Business Interruption cover, if everything goes up in smoke this is going to keep you going whilst you rebuild your business. This cover is absolutely essential, if you have no income to the business, you have no business!
Liability insurance – This is an absolute essential that most people will recognise, possibly before many of the other covers. It covers your liability against being held negligent for loss, damage or injury to a third party. If you have a business insurance package or a commercial combined then it’s almost certain this is included.
So, what’s it covering?
It covers three essential areas, Public Liability, Product Liability and where you have employees it’s a statutory requirement to have Employers Liability Insurance.
Goods in Transit, depending on how you transport your goods, yourself or by carrier, then this cover is going to protect your products whilst they are moving about.
So where does insurance differ when I am exporting?
Funny you ask that, the government is right, exporting is great but you need these extra covers, or at least wider cover than you already have, subject of course to what your existing business insurance already covers.
Whilst your machinery you are using probably isn’t going to change, you may have a contract to manufacture and export your products for an overseas customer, what’s going to happen if you are unable to run your machinery due to breakdown, is it going to cause you a problem?
The customer will be unimpressed if he doesn’t get his goods. You can insure Machinery Breakdown (note many policies appear to include machinery breakdown insurance, check what it actually covers, you might not have what you think you have).
Machinery Breakdown Insurance is going to get you back up and running quickly, it can also include the losses due to the interruption in business too, but speak to us about this.
Your business will be relying no doubt on the use of technology that you need to not only run your business, say design of products for your overseas customers, but perhaps use of CNC machinery. You might think that you are not going to get hacked… think again, it doesn’t just happen to the big boys. Cyber insurance is growing, not as fast as the types of hacking that takes place, either way, don’t just think your local techie is going to sort it out, the hackers are smarter than that and they have some ingenious methods to stop or seriously damage your business.
Ok, we have probably discussed some of the risks that won’t be on everyone’s radar, but now let’s look at the bigger risks that you might be faced with. Exporting is great when you understand these risks.
The Wild West, where are you exporting to? USA & Canada exports are what insurers nightmares are made of. Though it might sound nice, as you think of your own trade missions to the USA, exporting to the USA can cause you a bit of a problem; litigation, and 3000 of miles and a legal system that shoots first and asks questions later.
Before you set sail on your exporting journey to the USA speak with your broker first to make sure that your insurer doesn’t have an issue. In general they start getting a bit twitchy above 15% of your business turnover to the USA and Canada; we can place businesses with 100% exports to the USA.
And the rest, plain sailing you would think? So you’re not exporting to the USA, however there are many countries that are sanctioned and these change all the time. Whilst Europe is going to be fine there are many other countries that insurers will refuse to cover, some of the middle east for instance; Myanmar, Iran, etc. If you are exporting to these countries or perhaps considering it we can place certain countries that many brokers can’t. Our most recent example is Iran!
The cover provided by Liability Insurance, and we are really referring here to Product Liability, is very much down to what you are manufacturing and where it’s going. The product liability is going to indemnify (defend and pay if they have to) you against claims arising from the products you are manufacturing whether you export them or not. Whilst you may not have manufactured all the components yourself, the first port of call is going to be you so you need to have adequate cover in place covering these eventualities.
It’s not just the product
Your product isn’t just the item itself. You may provide instructions on how to use your product, great, five minutes on a search engine translate and you are well away, any language, any country, you can produce them by the bucket load all nicely packaged in the tongue of where your product is going… what can be easier?
DON’T DO IT
Yes your instructions are part of your product and you get them wrong because you translated them incorrectly is almost certainly going to result in the not so friendly lawyer just waiting to have a go.
Exporting is great when you get all these little bits are tied up together, and your insurers are happy bunnies about what you are doing.
Up in smoke
Really exciting this exporting stuff, you might be new to it or somewhat seasoned, your export turnover is growing and that favourite customer in the far off land is begging you for more of your products. You see your bank balance is getting bigger and your customer just wants more of your reciprocating widgets, you start to give him what he wants at the expense of other customers.
You get a call from your favourite customer who wants to stop any further production, his manufacturing and assembly plant where you have been supplying products for is now charcoal.
What happens now, your business is going to be affected and there is nothing you can do about it. Remember that vital cover you had called business interruption? Well as long as the cover has been extended to a specified overseas customer your business might no longer have them as a customer but your insurance company is going to come to your rescue.
Business Interruption can be extended, to include a specified customer extension (or unspecified customer extension), it depends on what the insurer and the sum insured required. Let us look at this for you, the protection is easily applied and can save your business.
Ships ahoy, well sort of
So, you’re ready to go, manufactured, your instructions in place, nicely boxed up, credit sorted, shipping arranged, ready to roll.
You have Goods in Transit cover on your policy? This isn’t quite going to cut it when your goods are going out the country. Marine Insurance is now required, you’re into the big boy stuff now, there are of course a number of ways to do this, freight forwarders, agents, etc., but you can arrange all the cover yourself.
Marine insurance provides exporters with an option to cover their goods en route to their customers. It covers the goods whilst they are in transit from your premises to their final destination, subject to it being an acceptable country by the insurers.
So whether you are exporting your goods on a plane, a train, an automobile (couldn’t resist that one) and yes even boat, Marine Insurance is essential and is easily arranged, by us of course.
In a nut shell
Insurance for exporters only differs a little from the cover that many businesses already have. The complicated bit (for want of a better word) is the understanding of what you are doing, and that is where we come in. We can place all the covers you require together in one portfolio of covers, dovetailing your insurances to protect you from the first piece of raw material, to the door of your customer anywhere in the world (other than excluded countries of course).
There are other covers that are available, however you’re probably getting bored and my fingers are aching, so speak to us and let’s build the cover you need.
And yes, as the government says, “exporting is great” really but when it comes to insurance let us package all those extra covers together.