Sometimes when I ask a client if they would like to extend their Business Insurance to include Flood cover, they might laugh and point out that they are on top of the hill or a few floors up in a building. However, if you combine Flood cover with Business Interruption you may find you are then protected for when Flood affects your suppliers or perhaps the inability to access your premises if a flood occurs nearby, even if your own premises are immune from floods.
We saw examples of this in the floods in January 2011 in Brisbane. Basement Car Parks of office buildings filled up. It resulted in some office buildings not being able to be accessed for some weeks despite no direct flood damage to their Office. Many were uninsured for this event, but they could have been.
Business Interruption sections in Business Packs have additional benefits or extensions such as the following:
This benefit will pay for loss of income that results from an interruption to neighbouring properties where your business is located or to properties in the vicinity of the premises which shall prevent or hinder the use or access to your premises business, that is caused by insured damage such as flood if this section is taken.
This extension pays for loss of income that results from an interruption of your business that is caused by insured damage such as flood (if this section is taken) to land based property located in Australia that belongs to or is under the control of any company or authority producing, supplying or delivering the electricity, gas, water, sewerage or communication services, used by the business. Where the property of the supplier is not at or immediately adjacent to your premises, the interruption of the supply extends for greater than 48 hours.
You may have major Customers or Supplier that could be susceptible to the risk of Flood too. You can actually specify or name those companies on the policy and if they have a Flood event and as a result interrupt your business. If they cause you a loss of income, you can claim this in the Business Interruption section of your policy.
With some insurers, if you forget to specify suppliers or customers, you may still be able to claim up to 20% of the sum insured for loss of income that results from an interruption of your business that is caused by insured damage that occurs in Australia to the Property at the premises of any of your suppliers; or manufacturers of products utilised or sold by the business; or repairers or processors of materials, components, or goods or Property at the premises of any of your customers and clients.
Some insurers may also cover for loss of income as a result of flood damage to Documents and electronic data files belonging to or held in trust by you while in transit or while at premises not occupied by you. This includes Computer installations including ancillary equipment and data processing media utilised by you. Who knows where your cloud files are kept? Also property stored at any premises not occupied by you, including freight forwarders or while in transit outside of the premises occupied by you along with Roads, bridges and railway lines over which stock, components and materials are conveyed to and from the premises.
So if the Basement Car Park of your building fills with water taking out all the electrical systems and lifts up to your floor. Or a flood surrounds your factory causing goods to not be able to be delivered or sent, let alone the staff being able to get to work. Or if these things happen to a major supplier or a major customer. If this causes a loss of your normal turnover causing a major disruption to cashflow putting your business under severe strain, you may be glad you chose to add the Business Interruption section along with Flood cover.
Please talk to us if you would like to discuss these covers further. Another example where our expert advice may just save you!