The following Case Study considers the loss under an Australian Standard Industrial Special Risks (ISR) Mark IV policy. This includes the policy response for Material Damage - Stock and Business Interruption - Memoranda Turnover Elsewhere After Damage.
On 1 February 2008 fire destroyed the 177 year old infamous taxidermy business, Deyrolle, in Paris. An ancient preserving recipe of arsenic may have fuelled the fire and caused unknown residual effects. Ninety percent of its stock from beetles to large game animals was destroyed but the 18th-century building was able to be restored.
News of the destruction was as large as its reputation. Soldiers moving the few salvageable items by hand to a nearby military depot for temporary storage were apparently a sight to see. The Minister for Culture sent out a request to the museums of France for donations. Unlike with most business fires, everyone was moved to help assist.
Hermès issued a limited edition "Plumes" scarf, Christie's Paris held an auction and a publishing house released a history of Deyrolle's, in fundraising efforts.
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| Nile perch (Lates niloticus) |
Losses were estimated in the millions. Not surprisingly as, by all accounts, the number of reported items the fossilised shop held included everything from stuffed llamas and bull heads to an antique Nile perch skeleton, and cabinets of brilliant butterflies and exotic birds that attracted artists.
In recent years the store had been financially rescued by an aristocrat banker. Anecdotal records of those who had visited said it was free to wander the multi storied and roomed museum. Interior decorators are the store's best customers with a butterfly costing about AUD$55 to a lion around AUD$45,000.
While the building is repaired the taxidermists now work from home.
The business was significantly under insured.
If Deyrolle were fully insured under an Australian standard Industrial Special Risks (ISR) Mark IV policy how would the policy respond?
Section 1 Material Damage
What we might term curios or artwork to other Insureds would be insured as stock and Basis of Settlement (c) to (e) being, raw materials, work in progress and finished goods stock, would respond.
The effects of airborne particles, monitoring air quality and clean up of potentially hazardous chemicals would all be included under this section of the policy.
Consider:
Additional Benefit (a) Professional Fees
Additional Benefit (d) Temporary Protection and Safety of Property
Additional Benefit (f) Removal of Debris
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Section 2 Consequential Loss
A loss of turnover from sales of artefacts has been realised. In determining the loss, the policy (Memoranda to Section 2) would require income from all sources be disclosed and offset the reduction in turnover. It is likely the fund raising efforts would offset any claims because it has been to the benefit of the Business.
Additional costs claimed under item 1(b) Increase in Costs of Working or item 4 Additional Increase in Costs of Working may include:
- Additional storage costs at military depot or elsewhere;
- Temporary premises for taxidermists to work from;
- Costs to reinstate more quickly such as overtime or premium rates to contractors; and
- The costs of running the fundraising events.
If all people involved charged commercial rates it is likely the fund raising events were very costly and might not meet the economic limit test under item 1(a). Therefore a separate sub limit for Additional Increase in Costs of Working would have needed to be declared for the costs of running the fundraising events to be covered.
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Author
Claim Solutions Pty Ltd.
Insurance Policy
Country: - Event: Paris, France Case Study: Australian Policy wording
Policy Description: - Case Study based on an Industrial Special Risks (ISR) Mark IV Wording
Insurer: - N/A
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