Natural Disasters: Impact on Commercial Insurance
When a flash flood strikes and causes almost £50 million in damages, it’s often referred to as an ‘act of God’. It’s difficult to apply that same term when science is involved…
Just weeks ago, a Russian rocket transporting a satellite into space malfunctioned and plunged into the Pacific Ocean. It’s still unclear what exactly caused the engine failure (currently described as an ‘abnormal situation’) but it will never be deemed as ‘fate’ by scientists.
The damage to the satellite resulted in a loss of approximately £254 million. Satellites can be insured – predominantly under ‘all risks except’ policies. Should Russia’s satellite have impacted on land and damaged business property, the owners of such establishments would have legally been able to claim.
This is far from an ‘act of God’ and is extremely rare but it’s nice to know you’re looked after against extravagancies such as space damage. When it comes to floods, lightning, fires etc, we should take business insurance much more seriously…
Early January saw Cyclone Oswald strike Queensland, Australia; inflicting fatalities, injuries and property damage all over the coast. In the wake of the damage, over 6,000 claims were filed and the City of Bundaberg endured its worst ever flood – 1,000 properties completely swamped.
This is just one recent example of an ‘act of God’ occurring outside of the UK but with the wettest year on record just behind us, it’s time to up our own flood precautions.
So, just what does a commercial insurance policy offer you in terms of protection? With a broker, it depends on what you need. For example, you may require cover for external damages only, because your flood defences are adequate enough to prevent water from entering the property (it will take more than a few sandbags). In this situation, the broker can remove the contents feature from your policy and you save money.
For clarity’s sake, let’s take a look at what a standard protection package should include:
- Property damage
- Material damage
- Business interruption
All the liability insurance is included too – protecting you against any lawsuits from customers or staff, but the above three are arguably the most important when it comes to natural disasters.
The exterior of the building can be in such a state, that the business becomes inoperable. Now, this is a world away from a satellite becoming inoperable as your business can be repaired and fit for trade within weeks. During the interim, the broker has your back for any income loss and so the holistic impact from an ‘act of God’ is cushioned by your commercial property insurance.