Cafe owners often find it difficult to get the right insurance product for their needs, with many different steps involved in formulating the right solution. Even when owners invest in a dedicated cafe insurance policy, there will be a range of policy options that can go overlooked and under-appreciated.
One of these is business interruption insurance, an optional addition to many cafe insurance policies that can be a big help to companies in the event they are unable to continue operating for a time.
This policy was especially valuable for Georges Hombert, a Perth cafe owner whose property was extensively damaged by a fire in the neighbouring property within a shopping mall.
While the cafe experienced extensive damage, including business interruption insurance made it easy for the business to get back on its feet. In this case, Bruce Insurance was also able to provide a specialised external consultant, to further help Mr Hombert with his insurance claim.
What was the extent of the insurance claim?
Mr Hombert’s insurance claim originated from a fire which caused extensive smoke and water damage to his premises in May 2014. The fire left the cafe unable to operate, while also destroying a large amount of stock.
Denise Cummins, who worked on this case at Bruce Insurance, highlighted just how extensive the damage had been to Mr Hombert’s property.
“He couldn’t trade for nearly six to seven weeks because of the lost power. Also access to the site was prevented, because the cafe is in a shopping centre, so his clients couldn’t access the cafe,” she stated.
Given the extent of the fire damage, a number of sections within Mr Hombert’s policy were activated following the blaze. Clearly there was fire damaged stock and contents which was replaced quickly by the insurer.
However, one of the most valuable parts of his cover was the business interruption insurance.
How did business interruption cover help Mr Hombert?
For Mr Hombert, business interruption insurance gave him a level of protection for the duration of time that he was unable to continue operating. Because of the extent of the fire damage, rewiring the space took four weeks to be completed, considerably delaying efforts to rebuild the cafe.
In this time, ongoing costs like wages were able to come out of the business interruption cover, limiting the financial strain on Mr Hombert’s cafe and providing his employees with ongoing income.
Ms Cummins went on to emphasise the further benefits that came with this policy.
“The client was able to claim for loss of profits and also the claim preparation costs,” she said.
“If he had to do any advertising to let people know the cafe was back open, that was also covered under the business interruption section of his policy.”
At the same time, the business interruption cover was able to compensate for lost revenue as a result of the slow rebuilding work next door. With the other properties damaged in the fire taking much longer to open, their rebuilding work significantly interrupted Mr Hombert’s business. Again though, this was covered by the business interruption insurance.
How did working with a business interruption consultant assist with this case?
Along with working through this claim with Mr Hombert, Bruce Insurance also appointed an external consultant to aid with this case – Graham Cox from Your Claim. Mr Cox worked closely on the case, bringing a specialised level of knowledge that gave the best outcome for this cafe insurance claim.
“We were able to understand his business, get to know his business and then put together a calculation that would best maximise his payout from the insurance company, in line with what the policy allows,” said Mr Cox.
“What we are able to do is step in and calculate a claim that is in strict accordance with that policy wording that entitles him to his maximum benefit.”
This level of involvement is something that many insurers would also prefer to avoid, which is why business interruption insurance is treated as optional in many policies.
“An insurance company won’t invest the amount of time that is required to better understand Georges’ business,” stated Mr Cox.
“From the insurers perspective, they don’t spend a lot of time doing this and they are often reluctant to do so.”
With so many benefits for cafe owners, business interruption cover should be considered an essential part of the insurance policy a company puts in place.
“We always try to offer [business interruption insurance] to our clients because it is a very important product and sometimes it is overlooked,” Ms Cummins concluded.