This article is preceded by a more detailed article on the background of the Melbourne Windstorm of 2 April 2008.
Update: On 24 November 2008 Insurance Australia Group (IAG) reported their claims associated with this event totalled AUD$20 million.
Home & Contents
Consumers who have spoiled food as a result of the power outages are advised to review their house and contents insurance policies or contact their insurers’ claims hotlines.
For permanent repairs to homes, the home owner should contact their insurance company.
Motor Vehicle
Motor vehicles sustained damage when power lines fell on the vehicles (in Tasmania) but mainly from trees and other debris falling on them.
These claims are already being processed by insurers.
Business Insurance
The areas affected by the wind storm and power outages are largely residential. As a result, mainly small businesses have been impacted with the majority sustaining stock spoilage because of lack of refrigeration. Other wind and water damage has occurred to buildings, fences, and the lifting of roofs damaging equipment and (non refrigerated) stock.
Restaurants and retail businesses may have sustained an interruption of up to 5 days (if power is restored by 7 April). Larger businesses that rely on electricity for manufacturing tend to have business continuity plans and access to back up generators. We noted a large retail liquor chain in a power outage zone also had back up generators.
For some businesses the losses may be limited to some stock spoilage and interruptions from a few hours to a maximum of 5 days. Given the potential length of the indemnity period losses may not exceed deductibles.
Businesses with time deductibles may not be able to claim losses for the initial interruption, say the first 48 or 72 hours.
Commercial policies require there to be insured damage before a Consequential Loss (Business Interruption) can be claimed. For many businesses the physical damage (Material Damage) may be small. If the power outage is the reason a business cannot trade then a suitable extension of cover to the policy is required.
Not since the Victorian Gas Disruption on 25 September 1998 which affected so many households and businesses over a 2 week period has an interruption to utilities affected so many in Victoria for an extended period of time. (The Auckland power crisis in February 1998 lasted 5 weeks.)
The standard Industrial Special Risks (ISR) Mark IV policy has a "Public Utilities Extension" to Section 2 Consequential Loss cover.
This states:
"Any loss resulting from interruption of or interference with the Business in consequence of damage to property, caused by a peril damage as a result of which is insured hereunder, at any electricity station or sub-station, gas works or water works of a public supply undertaking which is situated on or immediately adjacent to the Premises shall be deemed to be loss resulting from Damage to Property used by the Insured at the Premises."
Business Pack policy wordings may differ.
While the standard ISR wording still has the issues of a) what is "a public supply" and b) is it situated "on or immediately adjacent to the Premises", it is a necessary wording in this event.
If a business has got over the hurdle of the size of the deductible it will be necessary to determine whether any Public Utilities Extension applies. The Victorian Gas Disruption was almost 10 years ago, but I can't help feeling like here we go again.
Author
Claim Solutions Pty Ltd.
Insurance Policy
Country: - Australia
Policy Description: - House & Contents, Motor Vehicle, ISR, Business Pack.
Insurer: - Various
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