With many business owners getting ready for an end of year break, now is the time to fire-proof your insurance cover, particularly in bushfire prone areas of the country.
This due diligence is not in vain. The NSW Department of Primary Industries has tipped that the 2012-2013 bushfire season may well be the “worst in years”. To date, there have been 373 fires that, for example, NSW Rural Fire Service volunteers have attended, compared to 180 in the same period last year.
It is important to realise that the potential damage of bushfires are not limited to rural properties, but also to suburban and coastal areas. This means any business that is potentially exposed to bushfires should review its insurance policy to ensure it has the right level of cover.
The wet weather experienced in the past few years also means there is an abundance of timber and plant matter to fuel fires. Stock, fences, sheds, tractors and electricity poles have been destroyed.
Don’t think it can’t happen to your business. Taking a few hours to review your insurance with a qualified adviser is worthwhile. A good insurance adviser will not only assess the cover needed for your physical assets but also the cover and period needed for the interruption to your business in the event of a loss; appropriately known as business interruption or loss of profits.
Case study: NSW holiday park
A perfect example is a caravan park in the South Coast of NSW. Its previous policy had a 12-month indemnity period but during a review of the business’s insurance needs, it took up our advice and extended it to three years to take into account the enterprise’s circumstances.
Unlike many other businesses, the holiday park is seasonal and does most of its trade during peak summer holiday season and its location is bushfire prone. If the park was destroyed by bushfire it’s likely it would take longer than 12 months to repair the damage and also encourage holiday visitors to return. Hence a three-year indemnity period was deemed appropriate.
Its policy now includes business interruption insurance to cover the income of the park during any rebuilding of its facilities in the event of a bush fire.
If fire attacks
From the moment a business owner gets insurance cover, having an expert adviser can help ensure you get:
- The right level of cover;
- A suitable indemnity period – that is, the time during which the insurance company compensates the business in regard to the financial consequences of the damage –to ensure the payout will realistically cover the business if it has to make a claim as a result of a fire and re-establish its operations;
- Business continuity insurance; and
- An updated valuation of assets. Facts remain that many businesses underestimate the value of their assets. What this means is that in the event of a claim, there will be a shortfall between the payout and the cost of replacing the asset.
It’s a good idea to use a professional valuer when estimating the value of insured assets. And it’s important to remember to use the replacement value of assets for insurances purposes, rather than the depreciated value of assets.
Ultimately, although insurance is often not the first priority for many busy business owners as we hit the holiday season, having the right level of insurance cover means peace of mind should a disaster strike.
For more business insurance information visit http://australia.marsh.com/