Insurance brokers will be tested on their advice after the riots. So will insurance companies. Some policy holders have another horrible shock coming.
A client’s factory burnt down in 2005. Like much of the damage caused in London and other areas, this was a small family owned business with around 30 staff. Within days of the fire assessors and adjustors started circling.
It soon became clear that the insurance claim process on the damage to property, equipment and stock was relatively straightforward as we had accurate, up-to-date, off-site electronic records.
But the buildings couldn’t be rebuilt overnight. Stock couldn’t be ordered, imported and delivered for months. Machinery has long delivery times. There was no way we could ship to and bill a client for at least 6 months. At least.
Which brings me to the challenge facing commercial victims of the riots. Business interruption insurance. First of all – do you have it? Second – it’s complex and the onus is on you to prove past and projected business turnover and profits at a time when you, your family and your staff are all in shock and scared. Third – while you have to prove the numbers based on historic accounting and sales data at the same as holding your life together, the insurance companies (may) play a long slow game, hiring loss adjusters who appear to be tasked solely with reducing your payout.
Loss adjusters use standard techniques. They offer a heavily discounted settlement within days of the tragedy or suggest that your business of several generations may not be worth rebuilding as the competition will have taken over your market share by the time you are back on your feet. These tactics may be commercially valid (especially as if you decide not to start again, the payout becomes far less) – but these business people are not prepared for a toxic Dragons Den – their livelihoods have just been destroyed.
Where insurance companies wave a tempting cheque in front of vulnerable people’s noses just days after their life’s work and their assets have gone up in flames – some business owners may just take the tempting heavily discounted cheque and never start a business again or employ people again or pay taxes again.
Lets hope for Britain and all our communities that insurance companies play nicely and that the business owners are supported and get back on on their feet again soon.