Should Damaged Property Be Reinstated By Tender Or On A "Do And Charge Basis"?
The following case study considers whether damaged property should be reinstated in accordance with a tender process or whether a "do and charge" process is more appropriate.
Mr Bradbury is a manufacturer of fine chocolates. He operates his business from a building west of Melbourne, Victoria, Australia that he purchased several years ago. On 3 September 2003 a fire significantly damaged plant and building.
He has insurance cover for property and business interruption and is adequately insured. He is losing $10,000 Gross Profit for each week he is out of business.
Builders are available to commence work immediately but it has been suggested a tender process is required to ensure the reinstatement value of the building remains competitive. A period of 3 weeks is required to prepare and agree specifications, invite tenders, prepare quotations, analyse them and select the successful tenderer. Mr Bradbury’s business will sustain a Loss of Gross Profit of $30,000 over this period.
Should building reinstatement be conducted on a "do & charge" or "tender" basis?
If the builder is experienced in fire reinstatement it may be best to abandon the tender process and allow the work to proceed on a "do & charge" basis with a condition that the work is fully documented allowing it to be checked for reasonableness.
Author
Published with permission of Claim Solutions Pty Ltd.
Insurance Policy
Country: - Australia
Policy Descritpion: - Mark IV Industrial Special Risk (ISR) and many Fire policies
Insurer: - Various
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