Storms Ciara and Dennis – maximising recovery from your insurance

Property and business interruption insurance will be essential for helping businesses recover from the winter floods. Here are our top tips to help you maximise your recovery.

27 February 2020

Storms Ciara and Dennis have resulted in record levels of flooding over the winter of 2019/20, which have caused widespread damage and destruction in various parts of the UK. Early predictions place the anticipated damages and losses in excess of £400m.

For many businesses, property and business interruption insurances will play a vital role in helping affected business to repair any damage and obtain the liquidity needed to get their operations up and running again. It is essential that businesses make sure that they obtain maximum value from their insurance policies now. 

Here are some practical tips for policyholders to bear in mind when making claims:

Issue

Top tips

Notification

 

Property and business interruption policies invariably require policyholders to notify claims or circumstances which may give rise to a claim, within a certain period of time.

Review the notification requirements in your policy carefully.

In addition, some policies require notifications to have a certain format or content.

Seek advice from a broker or lawyer on your obligations.

Failure to comply with the notification requirements can lead to the claim being forfeit.

Act as quickly as possible.

Claims adjustment

 

Once you have made a claim, the insurer will typically appoint an adjuster to investigate the claim and start assessing the quantum of loss. 

Co-operate with the insurer’s claims adjuster so that they can progress the claim.

It is important to remember that the loss adjuster is there to represent your insurers’ interest – not yours. Part of their remit is to identify evidence which may permit the insurer to decline your claim. 

If you are uncomfortable with the loss adjuster’s line of questioning, seek independent legal advice.

Quantifying claims

 

Quantifying a policyholder’s claim for property damage and business interruption can be complex.

Given the complexities – do not accept the insurer’s adjusted claim number at face value.

Business interruption claims can be particularly challenging. Common issues that arise include:

  • How does widespread damage, such as a flood, impact coverage? In Orient Express v Assicurazioni Generali the Court held, in the context of New Orleans floods caused by Hurricane Katrina, there was no entitlement to BI cover because the policyholder’s losses were caused by the closing of the city.
  • Are there policy extensions, such as denial of access cover, which can mitigate this issue?
  • What is the trigger point for the start of the indemnity period – damage to the property / machinery or the interruption to business operations?
  • What is the basis for calculating BI losses – gross profit, gross revenue or increased costs of working? The policy will usually include a formula but it is important to note that these do not operate in the way accountants / finance teams might expect

Be willing to scrutinise how that number was calculated.

If you are in doubt, seek advice from a lawyer on the basis of your entitlement to cover.

Do not accept delays from your insurer

When an event arises causing widespread losses – such as major floods – insurers can be inundated with claims. This can result in claims handling delays as insurers struggle with the delays.

Keep up the dialogue with your insurer and ask them to update you on the progress of your claim.

While a certain level of sympathy for insurers may be warranted, this has to be tempered against the needs of policyholders. Where there has been a significant interruption to your business, the liquidity provided by a BI policy can be vital to your solvency.

If you have pressing business costs that you can only meet once you have received the insurance proceeds – let the insurer know as soon as possible.

In that regard, the Enterprise Act 2015 permits policyholders to sue insurers for damages where they unreasonably delay making indemnity payments.

 

Our specialist insurance litigation team is recognised as a leading firm by Legal 500. Our team of lawyers are highly experienced at helping policyholders to maximise insurance recoveries. Please contact us if you require our assistance.

This article was written by Matthew Walker.

Key contact

Rachel Cadby

Rachel Cadby Trust and Probate Manager

  • Private Client Services

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