How’s this for savvy? In September 2010, in response to media reports the summer La Nina weather pattern was expected to be eerily similar to the system that produced the catastrophic floods in South East Queensland in 1974, the owners of Allens Industrial Products (Allens) had the smart idea to update their business insurance to include flood cover. Allens sell safety equipment and industrial machinery.

Manager Darryl Pryde said at the time “no-one knew how Brisbane would be affected by similar weather conditions to 1974 because Brisbane is a very different place now. It turned out that we were in one of the last streets to be affected.”

As a result of the business owner’s insight, Allens added flood cover to its existing property and building insurance and to its business interruption insurance.

Business interruption insurance helps protect the goodwill of a business, as well as protect its profits or minimise losses, and assists the business in continuing its operations if it is impacted by an event covered under the terms of the policy. It’s also a way of maintaining cash flow in the face of an insurable event. Depending on the policy, business interruption cover may kick-in when there is damage to, or destruction of, an insured property or adjacent property, damage that prevents staff, customers, suppliers and the like entering and exiting the property, or government acts prohibiting access to the insured property.

However, there are some events where business interruption insurance will not cover the business. For example, if the overall market that a business operates in is experiencing a downturn, the loss that such a downturn causes will not be covered by the policy. For instance, if the tourism industry is down a business operating in that industry - like a hotel or tour operator - can not claim for the loss caused by the economic downturn. Another important area to remember is that material damage cover will not cover a business as extensively as business interruption could. For example, material damage can cover things like replacing chairs and tables but it will not cover the loss of income generated from a loss of customers whilst the damage is being fixed.

The Brisbane floodwaters peaked on Thursday 13 January 2011, causing extensive damage to Allens’ premises and stock. Importantly, Darryl made contact with his Marsh insurance advisor as soon as the disaster hit - an important reason why his claim was expedited.

“We were on the phone to our insurance advisor very early on Friday to inform her of the damage and on Saturday she attended the site and assisted our thought processes and confirmed what we were doing was okay.”

By the time the advisor arrived on site, the team at Allens had commenced the clean-up operation and had begun disposing of ruined items, being careful to digitally photograph the damage and make exact records of the stock and other property that was ruined or damaged.

“I assisted Allens with all the necessary requirements such as processes for stock counts and ensuring that salvageable items were not removed before they received assessor approval. Based on my previous claims experience, I provided guidance on what could and could not be salvaged,” says Marsh insurance advisor Robyn Sodhi, Allens’ insurance advisor.

By the Monday a meeting had been arranged with a loss adjuster who attended the site along with Robyn. “Up to that point we had never had any experience dealing with a loss adjustor,” explains Darryl.

“Later that week a forensic accounting representative came to the site to talk us through the claims process and also became the key contact point for the loss adjustor. Our insurance also included the provision for claims preparation, where the forensic accountant’s fees were included as part of the claim,” he says.   

“To ensure that Allens could commence trading as soon as possible, a proactive approach was undertaken, such as setting up a temporary office from the owner’s private dwelling and two demountable buildings, with the cost forming part of the business interruption claim,” says Robyn.

“The key to a positive and successful outcome was to make sure that all parties (client, advisor, assessors, claims consultants, forensic accountants) worked and communicated together in a collaborative and timely manner,” says Robyn.  

Darryl’s advice for other businesses thinking about taking out business interruption insurance is to seriously consider how the business would be affected if it was struck by a disaster. “When something like a major flood happens, you see how beneficial having the right insurance is to the longevity of the organisation. Business interruption insurance gives you the confidence to get the business up and running again.”“My advice is to take half an hour and think about the events that could impact the business and put in place the right insurance to cover you for these events. It’s also really important to read policies carefully to make sure you understand exactly what you’re covered for.”


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The information contained in this publication provides only a general overview of subjects covered, is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Insureds should consult their insurance and legal advisors regarding specific coverage issues. All insurance coverage is subject to the terms, conditions, and exclusions of the applicable individual policies. Marsh cannot provide any assurance that insurance can be obtained for any particular client or for any particular risk. CATS 11/0131


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