Damage & business interruption: keeping a company economically healthy
Over the last few months, European countries have been hit by unprecedented natural disasters: floods, fires, drought... all of which can impact the economic health of a company, whatever its sector of activity. Professionals can protect themselves from these disasters, which are sometimes unpredictable, by taking out "Damage and Business Interruption" insurance, which can protect their business depending on the cover taken out. This allows them to deal with the financial consequences of business interruption and ensure the continuity of the company. These contracts make it possible to cover the fixed charges linked to permanent overheads (staff remuneration, loan interest, rent, taxes, depreciation, etc.) as well as the result.
Who is the “business interruption” cover for?
Operating losses can be caused by a variety of events: fire, water damage, natural disasters, machine breakdown, vandalism, etc., and can have an impact on the business and turnover. This guarantee, which is conditional on the existence of direct damage, can sometimes be extended to losses without damage, caused by particular events such as demonstrations or administrative closures. When this guarantee is acquired, it enables the professional to return to the financial situation he would have been in if the loss had not occurred.
How does the procedure work?
Once the loss has occurred and the company has reported the loss to its insurance company, the latter calls in a loss adjuster. The adjuster’s task is to determine the extent of the damage and to estimate the consequential damage. To do this, the adjuster goes directly to the site of the loss (sometimes after an initial contact which may have been done by video-expertise) to ascertain the damage and decide, in partnership with the insured, on the actions to be taken so that the company’s activity can restart as soon as possible. It is not uncommon, depending on the disaster, for the expert to propose post-disaster solutions such as decontamination or dewatering, both for equipment and for the building. The aim of all the steps taken will be to limit the impact of the disaster.
Which function does the loss adjuster have?
In order to estimate the duration of the interruption of activities, the expert includes in his calculation the time necessary for the reconstruction and the resumption of operations, taking into account the regulatory constraints and the time necessary for the replacement of damaged equipment and/or goods. It is not uncommon that the activity of the damaged company can be partially maintained.
For equipment, whether following a flood or a fire, the main risk is that of corrosion. In the latter case, a specific cleaning is prescribed with decontamination of the place and/or putting the equipment under dry air…
Because damage and business interruption insurance has only one aim: to guarantee the continuity of the company and maintain its financial health, insurance professionals and their policyholders must be able to rely on experts who combine technical expertise, proximity and responsiveness.
Franck MARAND – Damage loss adjuster – Stelliant Loss Adjusting
Alexandre MARTIAL – Business Interuption loss adjuster – Stelliant Loss Adjusting
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