Beware the small print

Insure for all you’re worth –and beware of the small print and the disclaimers, warns Circle Golf’s Ian Smith.

Insurance is a funny game, calculating the book – to use betting parlance – is a tricky thing. In bookmaking it’s quite simple; you collect the bet money over the various runners and once the race is run you know how much you’ve made and how much you’ve lost. In insurance when the year’s policy has expired, you only know how much you’ve lost that year, because claims can occur years after the policy expires. This is called the tail, and many tails have destroyed many insurance schemes.

There’s only one thing more damaging than a poorly anticipated tail and that’s applying economies of scale to a poorly anticipated tail. For over 20 years the insurance market has been flipflopping between understanding this issue and preparing for it and then forgetting all about it and hoping to cash in on a quick buck.

Now I’m being a touch facetious here, but it’s important that you take a look at your current policy and look out for clauses on ‘more suitable insurances’ and read the ‘E & OE’ disclaimers.

Check the limits of financial liability cover, check the clauses of the personal liability cover – maybe after you do that, you will start to understand why we shout from the rafters about transparency and adequacy. Also look out for phrases such as ‘please check this is suitable for your requirements, as errors cannot be rectified at a later date’.

If we – as professional brokers and underwriters– instruct you as to a level of cover that we believe you require and you follow our advice, there should be no opportunity anywhere for us to bow out of our responsibility. And with the best will in the world, how on earth can you as a Club Manager tell whether your policy is adequate?

Let’s take a closer look at your largest asset, your course. Here at Circle Golf our policy provides all risks cover up to single claimable limit of £500,000 for ALL PLAYABLE SURFACES of the golf course and all foundations that go into supporting and retaining said playable surfaces. So watch out for any definitions such as ‘closely mown areas in play’ or ‘greens, fairways and tees’. It’s pretty obvious that vast swathes of your golf course cannot be defined as being closely mown, or as greens, fairways or tees.

Staying on the subject of the course – if you happen to be in the possession of USGA greens, fairways or tees – I would recommend you take a very very close look at your policy cover – especially when around 90% of the costs of such a green lies under the surface. Take a look and see if your policy limits the claim amount per green or whether it only pays for the closely mown surface element.

And finally, beware of companies promoting like-for-like quotes. Advice and service are not comparable commodities. If I were to knowingly provide an insufficient level of D&O cover, or limit the course protection you enjoy – which I wouldn’t!– then one sure fire way to suggest you knew all of this is by placing a lovely big disclaimer on the insurance contract, essentially rendering all advice provided as irrelevant. So be very very careful when you read that contract!

Article published in Clubhouse Europe issue 11