Chief Executive’s Blog: The Perils of Under-Insurance

All of us in the BWF team were saddened to hear the news that Sprowston Joinery was to close.  Managing Director David Lomax has battled to keep the company going since its factory burned down last August, but has been forced to accept that the obstacles to getting things going again in the current market would be overwhelming. It’s a sad end to a family company which had traded for over 50 years, and which had built up an excellent reputation as a small, high quality window manufacturer.  In days gone by, they produced bespoke and special windows for Boulton and Paul in Norwich, and its sister company Ambass-a-Door was one of the first small companies to gain accreditation for its windows under the TWA Scheme. David himself has been a BWF Council member for several years.  Even now, the company had a strong order book and good long-term prospects, which it had sought to meet having managed to organise some manufacture following the fire.  I saw David at EcoBuild, when he was still optimistic for the long term, but growing increasingly worried by the protracted negotiations between insurance companies. Most people, I suspect, would think the same as David if a similar thing happened to them.  The fire was caused by a neighbouring business burning rubbish, which then spread to his premises.  The business was insured; the fire wasn’t his fault; surely that would be straightforward.  But it turned out that Sprowston was under-insured.  And then there were complications over the allocation of a proportion of blame which I understand have not yet been resolved.  His insurers remained supportive, but reached a point where they were not prepared to continue advancing cash without certainty of recovering it from the other company. The salutary lesson from David’s unhappy experience is the peril of being under-insured.  Our insurance partner, Towergate Risk Services, tell us that they regularly find that when they speak to joinery companies, the level of cover is insufficient and the management has not understood some of the conditions of the cover – most commonly, the requirement to bag and remove all combustible materials from the premises on a daily basis.  You may say that’s impractical; so it might be, but if that’s the condition of the contract, you risk your whole insurance cover every day you don’t. In Terry Pratchett’s book “The Colour of Magic”, the Discworld’s first ever tourist struggles to explain “in-sewer-ants” in a city that has never heard of the concept to an incomprehending bar full of ne’er-do-wells, until one suddenly cries out “I get it! It’s like a bet. You bet me that my pub won’t burn down, and if it does, you pay up.”  The thing is, if you don’t put down a big enough stake, you may not get the payback, even without the kind of complications David has run into.  Insurance premiums are a cost and there is always the temptation to keep them as low as possible, but like anything else, you need to know what you are buying, and you need to be sure it’s what you need. Meanwhile, David is looking to sell the machinery which remains intact (albeit with some smoke damage) and to find work for the six remaining employees.  Anyone interested can either contact him Ambass-A-Door name.  We all wish him better luck for the future.