PROPERTY ASSESS “NEWS UPDATE” ISSUE NO 22 August 2006
As you are probably aware, we provide a full claim service for you and your Clients. Included in this service is presentation and negotiation of your Clients’ property damage and business interruption claim. Whilst this newsletter is promotional, it provides invaluable information for you and your colleagues over a range of issues from “Value at Risk” to “Business Interruption” to “Liability”.
Further to our last issue of “News Update”, you might find the following of interest:
Value at Risk Calculation (VAR)
As you are aware we provide a Value at Risk calculation to Brokers and their Clients. This involves a full report, description of buildings etc., unusual features and costings on a sub-divided basis. Sometimes a Client needs convincing that their sum insured is inadequate and this service provides peace of mind for both Broker and Client.
The following are some examples of average re-build costs excluding VAT, professional fees, inflationary factors etc. The figures also exclude unusual features such as listed buildings or indeed factors that might increase costs such as restricted access or presence of asbestos. The figures are guidelines only and each case needs to be considered on its merits.
Shopping Centre (retail including fit-out) €130 – €180 per sq.ft.
Commercial Offices – suburban (excluding fit-out) €130 – €170 per sq.ft.
City Centre Offices with A/C (excluding fit-out) €170 – €250 per sq.ft.
Warehouse Structure (basic) €60 – €75 per sq.ft.
Warehouse with offices €80 – €100 per sq.ft.
Schools €150 – €250 per sq.ft.
Hotels €170 – €300 per sq.ft.
Private Dwellinghouse €120 – €130 per sq.ft.
Apartment Block €140 – €220 per sq.ft.
Multi-storey Car Park €7,000 – €11,000 per space
Surface Car Park €900 – €1,400 per space
(Note: For losses exceeding €5,000, we will carry out a full “Value at Risk” survey free of charge and report back to you, the Broker, with recommendations vis-à-vis sum insured, reviews etc.)
Recent Case Law – LMS International Ltd., -v- Styrene Packaging
Damage was caused by a fire that started on Styrene’s premises. Fire and smoke spread to LMS’s premises causing extensive damage. It was claimed that strict liability applied in accordance with Rylands –v- Fletcher (1866). It was held that the defendant, Styrene, had brought onto their land something which was likely to cause fire and the actions of the defendant must arise from a non natural use of their land. It was held that Styrene Packaging were strictly liable under the rules of Rylands –v- Fletcher. There was no necessity to prove the position in negligence or nuisance as strict liability applied under Rylands –v- Fletcher. The decision demonstrates that Rylands –v- Fletcher is still a plausible cause of action for spread of fire.
Escape of Oil Claims
Oil can seep gradually and go undetected for some period of time. The damage can be devastating, particularly to sub-floor areas of buildings. Early detection and treatment is therefore critical. The normal approach is bio-remediation which involves the introduction of “bugs” to treat the hydrocarbons with naturally occurring hydrocarbon degraders. Occasionally property owners can choose to ignore hydrocarbon (oil) smells, to the point where remediation is not possible and excavation of floor materials is necessary. The writer has significant experience in this area with a good working relationship with the Specialist Contractors involved (see the Testimonial section of our website www.propassess.com ).
Technical Papers
As a qualified member of CILA, I have access to technical papers on a variety of subjects including:
“Asbestos Update”
“Fire Performance of Sandwich Panel Systems”
“Policy Conditions”
“Personal Effects Insurance”
If you require any of these or indeed any assistance with a matter of a technical nature affecting a material damage or business interruption claim, please do not hesitate to contact me.
Business Interruption – What is covered?
We mentioned indemnity periods in the previous issue. If the maximum indemnity period is shorter than the time it takes to get the business back to normal, then your Client is at a loss.
BI Policy will cover expenditure reasonably incurred to mitigate the loss of gross profit. However, such items as bank interest are not covered even if the loan is taken out to finance repairs.
A manufacturer may have a penalty clause in his contract whereby he has to indemnify a customer due to non-fulfilment of his obligations. Such contractual penalties are not covered by a standard business interruption Policy.
Management time i.e., Senior Management, Accountants and Supervisors involved in extra work to restore the business to its pre-incident situation – those charges will not be recoverable under a standard BI Policy. Similarly Claims Consultant’s costs cannot be recovered but the technical expertise and knowledge brought by a Specialist Claims Advisor could facilitate a much higher payout than might otherwise have been the case.
Publicity surrounding a major loss may lead to a reduction in share price or loss of reputation etc. BI Policies specifically cover loss of turnover leading to loss of gross profit and do not pay out for less tangible losses. Reputational Insurance Policies exist but tend to relate to specific events.
Clearly when presenting business interruption claims, your Client needs expert advice and direction and we have settled a range of low and high value BI claims bringing a level of expertise which can only be achieved through experience. For more details see our Testimonial section of our website www.propassess.com
“Subsidence”
Do we have subsidence in Cork? The answer is no, in that we do not have subsidence within the meaning of an insurance Policy. Subsidence is really a U.K. phenomenon where clay sub-soils are affected. 99% of the claims in this part of the world are dealt with under the “escape of water” peril or contingency. Water escapes from service pipework causing weakening or undermining of foundations. However, the general name given to these type of claims is “subsidence”.
We offer a bespoke service from investigative stage to certification and completion of the works. These claims can be quite complex and drawn out and we explain every stage of the process to the Client and Broker, outlining precisely what is covered and providing regular updates. We have established an excellent working relationship with McDonnell Piling & Foundations Ltd., who have qualified Structural Engineers involved in every case.
Contractors
We have built up a relationship with a number of contractors who specialise in fire and water damage repairs etc. As part of our service, we can offer a managed claim approach whereby we not only negotiate settlement under the Policy but arrange all of the necessary works to completion stage.
Referrals
Referral is our best form of marketing. We rely on you the Broker to recommend our services to your Clients. They can visit our website which explains the procedure and has testimonials covering all types of losses, small, complex and large. You can be assured that you have referred your Client to a qualified advisor and thus remove any duty of care concerns that you might have.
Alan FitzGerald, FCII. FCILA, FUEDI, ELAE.
FITZGERALDS CHARTERED LOSS ADJUSTERS & ASSESSORS T/A PROPERTY ASSESS
16, South Mall,
Cork.
T: 021 4276933
F: 021 4276445
M: 086 8074553
alan@propassess.com
www.propassess.com
“Property Assess is registered to undertake insurance mediation under the European Communities Regulations 2005 and is registered with the Financial Regulator accordingly”.