As a result of the November floods last year, Grassland Fertilizers suffered losses of up to €1.3 million when up to 70% of the stock stored at its Cork facility was destroyed. A claim was processed and the underwriters failed to pay because there was no cover in place for flood, burst pipes, tempest and/or storm damage. Grassland are now bringing their insurance broker to the commercial court in an effort to recoup their losses.
What happened in this circumstance is more common than you may at first think and it all comes down to a lack of communication.
There are lessons to be learned from this current case, regardless of its outcome, for both insurance brokers and policy holders. Insurance is vital to the survival of any business and just like stock levels or cash flows, it must be monitored and reviewed consistently to ensure that you are getting value for money and your risks are minimized.
Brokers should recommend that clients regularly carry out a value at risk survey as part of their service to corporate clients. Businesses should not rely on their insurance broker to be responsible for every aspect of their insurance unless they have specifically contracted them to do so. It is not really the responsibility of the broker.
So what is a value at risk survey?
A value at risk survey is a highly technical procedure which is carried out by trained and experienced professionals. It gives a business an updated asset register and shows the calculated reinstatement value for all assets including buildings, machinery, stock, contents and loss of profits.
The survey will also point out areas where cover may be insufficient or unnecessary and identifies insurable interests, for example, a building may be held in private ownership where stock and machinery may be held in company ownership, therefore the company policy will not pay for the property owned privately and vice versa.
Due to the detail involved and the technical nature of a value at risk survey, it is unreasonable for you to expect a broker to take full responsibility for one’s sums insured. It is up to the business owner to have this assessed professionally. Any business owner can now visit www.clearys.ie and download a free information booklet explaining the importance of value at risk.
The survey takes about a day to carry out and it will ensure that you never find yourself in a situtation similar to this one.