Get your Business Interruption cover right

Getting your business interruption properly set up is most important and at CPR Insurance we are able to provide calculators to assist you or your Accountant or Financial Controller in more accurately estimating the sums insured you need for proper protection.

CPR Insurance Services have the resources of LMI who have tailored calculators for each insurer. We can email a link to you for completion, the information is kept confidential and LMI also guarantee that providing the information is accurate, you will not be under-insured.

Contact us for this free service for you.

Further information can be found on this link.

An area you should also consider apart from the right sums insured is the Indemnity Period in your Business Interruption Insurance. Is it adequate?

Quite likely it is not. When discussing with our clients what should be appropriate, they are often un-familiar in what would be involved in dealing with a worst case scenario if their business was out of action for a while. To imagine that following a fire that they could be back up and running, generating the equivalent income that they were before a disaster anything longer than six months seems un-realistic. But it is not and we provide the following example of a claim showing in chronological

A Fire Claim on a Business - an example

5 March 2010 - The insurance policy is renewed and an indemnity period of 6 months is specified in the policy.  Cover for Claim Preparation Costs is restricted to the Loss of Gross Profit claim not the Material Damage claim.

20 April 2010- A fire destroyed part of the building, stock and contents. A large proportion of the sales area became unusable. The indemnity period commences.

21 April 2010- Insurers are notified and loss adjusters appointed. Claim preparers are engaged but due to the restricted cover the role is limited to preparation of the Business Interruption claim.

26 April 2010- Debris is removed. The damaged section of the building is isolated, the remaining sales area reorganised to maximise customer traffic. Sign-writing is completed advising customers that trading is continuing. In reality sales cannot return to normal at least until the building is reinstated.

27 April 2010- Loss adjusters introduce a builder to the Insured.

5 June 2010- Loss adjusters advise that the building assessment has been completed. A specification was not agreed with the Insured prior to the assessment and the scope of works is found to be inadequate.

June 2010- it becomes evident that the foundations beneath the shop are unstable due to the amount of water used to extinguish the blaze. This requires extensive new building works and adjustments to the rectification.

June 2010 to July 2010– Engineers are engaged to provide an opinion on rectification needs and costs. Surveyor and Architect engaged to make adjustments to the building design to meet with more recent local council by-laws. Meetings continue with all parties in relation to what is needed to fix the damage and reinstate the building to something similar meeting town planning laws.

 2 July 2010- damaged stock is removed for insurers to recover any salvage value.

August 2010- An alternative builder is sought as the initial builder becomes unavailable due to other work being available.

17 September 2010 – Building plans completed and approved by Insurer and Loss adjuster

 11 October 2010– Council rejects plans and asks for amendments.

20 October 2010- the maximum indemnity period of 6 months expires. Any loss of Profit beyond this date is NOT covered by the insurance policy.

2 November 2010– Council finally approves plans for Building work needed

 17 November 2010– New Builder found by Loss Adjuster but cannot start for one month.

17 December 2010- Building works started and expected to be completed by May 2011 if there is no other delay from the builder.

Christmas 2010 trade is severely affected by Building still being damaged

25 June 2011– Building works completed despite weather delaying the completion date. Additional expenses made to advertise and inform the public of themselves being fully back in business.

20 October 2011– Turnover reaches 80% of Pre-claim revenues

31 January 2012– Turnover finally starts to exceed the income generated before the fire.

.

The benefit of hindsight.

A six month indemnity period is often insufficient for sales to return to normal. It is not unusual for sales not to return to the pre-claim level for many months after. For most businesses, with all the unexpected influences and delays that can occur outside the Insured’s control, you need a minimum of 24 Months Indemnity period on the policy with a Limit of Liability to reflect this amount.

Many other factors contribute to delays and they are not unusual. Finding out the damage was worse than first thought, having to engage professionals (subject to availability) to re-design or re-draft the reinstatement repairs needed. Builders are subject to availability and vetting by Loss Adjusters. Some plans depending on the extent of damage have to be approved by Local Government in laws that vary all around Australia. External Weather events etc can delay rebuild.

Extra expenses involved in seeking to return turnover to pre-event figures can be claimed under an Additional Increased Cost of Working section that can be included on the policy.

Cover for Claim Preparation Costs should be taken in relation to both the property and business interruption loss to enable the Loss Adjusters to be actively involved in both the Material Damage and Business Interruption sides of the claim.

We have access to specific Insurer’s calculators for the most accurate calculation of the sum insured needed for Business Interruption, but the Indemnity period is not easy to calculate. We have only the benefit of hindsight on previous claims to form the basis of what is realistically needed. 

Read more here

Latest News

High Court dismisses Business Interruption Test Case

Today the High Court dismissed appeal by Insurers on the Business Interruption test case. Even the big insurers make silly mistakes! But you the policy holder may benefit if you were one of the 40% of Business Pack policy holders that added Business Interruption cover to their Business Pack. While it was never the intent of insurers to cover policyholders for the loss of income from a pandemic, the fact that insurers never factored in a risk premium for it, and the fact there is supposed to be a material or physical loss to trigger the Business Interruption section, none of that matters according to the highest Court in the land. So what was the mistake? Simply that when insurers defined what they considered to be the definition of an infectious disease, they referred to the Quarantine Act of 1908 which since was superseded by the Biodiversity Act of 2015. Because the Quarantine Act of 1908 no longer exists, apparently you cannot draw on this for a definition of an infectious disease? Not one of the insurers picked up on this! Shows how much interest we take on the business of Governments, except what is reported in the media.

read more

Three Years running - Insurance Brokerage of the Year 1 to 5 staff

Mandy and Robert Cooper were extremely honoured and astounded to once again win, Insurance Brokerage of the Year for 2020 from Insurance Business Australia magazine. This is the third year running.

While this year has not been the easiest of years for the business with Covid 19, the Recession, the hard market and issues at Lloyds of London, we are literally all in this together as an Insurance Industry.

CPR Insurance Services continues to make our clients the number one focus of our business while managing our relationships with Insurers, who we need more than ever in this market climate.

CPR Insurance Services are a highly ethical Brokerage with a reputation as a trusted advisor who always acts in the Client's best interests. Their experience, knowledge and expertise is amongst the highest in the industry.

CPR Insurance Services is now ten years old as a business and is proud of being an Authorised Representative of Ausure and their partnership with Steadfast, giving CPR the strength and backing to match it with any Broking firm in the Insurance Industry, but remain focussed on supporting the Small to Medium business segment.

Memberships of the National Insurance Brokers Association, Australia and New Zealand Institute of Insurance and Finance, Australian Insurance Law Association, Australian Professional Indemnity Group and the Australian Institute of Company Directors, ensures CPR Insurance Services maintains the high standard of knowledge and expertise required to be one of the best Brokerages in Australia.

CPR Insurance Services also plays a strong role in their local community supporting other Sporting Clubs and Community organisations. They also support and promote local businesses with their operation of the Kedron Brook Business Group who meet regularly and has 174 members.

We are truly honoured to receive this National award once again for the third year as a recognition of CPR Insurance Services contribution.

read more