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Business risk management
 
Business loss from devastating events - what should you do?
 
As a Christchurch based firm we have advised many clients over the last four years about managing risk. A lot of our clients were already covered against losses from a major event such as an earthquake, but sadly many were not. We have all learned a lot over the last few years.

For families and businesses across New Zealand thinking about what could happen, and planning for it, has become much more of a priority now we have the recent memory of the devastation in Christchurch.
 
In an event such as this, the natural first priority for most is ensuring family, loved ones and friends are safe, after which people turn their attention to assessing any losses to personal property.

The next priority will be to consider damage to businesses and places of work, or investments, such as property. In the case of an earthquake almost all businesses will have some kind of material damage and therefore an assessment will be needed about the cost of repairs in relation to the Material Damage policies held by that organisation. These will cover the costs of repairs to property, plant and equipment, and loss of inventory etc.

Business interruption insurance is also an important component of business risk management. If a major event occurs, this is exactly the time you need this type of cover as it may provide vital compensation as you address the issue of getting your business back up and running.

Business interruption insurance can cover your gross profit, wages, additional costs of working, record re-instatement; and if you are a landlord, loss of rents.

What should you do to prepare?
 
The first step is always to have a good insurance broker who is there to support you if something does happen.

Choosing a broker is not all about them finding the cheapest premium. It is important that they understand your needs and negotiate a policy with an insurer that meets those needs. The insurers must also have a good claims payment history. After the events in Christchurch your broker should have in-depth knowledge on which insurers settle and pay claims quickly and those that do not.

Recent experience has really sorted out the good insurance brokers and insurers from those that aren't. Taurus can refer you to a number of reputable brokers so if you need any advice in this regard we can help.

Business interruption

Since the reality check of the Christchurch earthquakes the team at Taurus has advised many clients about future protection provided by Business Interruption insurance.

When providing advice about this, our main priority is to minimise the financial loss to your business following a major event such as a natural disaster or another scenario like fraud, fire, industrial accident, engineering failure or IT breakdown. There are many scenarios that could impact a business and we work with our clients to identify potential impacts.

Taurus can assist with this process and the first step is to look at existing policies as well as the latest financial year accounts. This is important so we can apply the necessary calculations and work out the best insurer for your needs.

Material damage

In circumstances where you are a tenant and there is damage to property, take photographs of the evidence to give to your landlord. This is especially important if you need to have items repaired immediately, for security or safety reasons, such as windows and doors.

Where there is loss to inventory, plant and equipment, make notes about all the damaged items and photograph them where possible. You may need to keep this evidence, as well as the damaged items themselves, until your insurers' loss adjuster can provide an assessment.

Finally, contact your business insurance brokers and request the forms required to make a claim.

Material damage - at home

In the event of an earthquake, if you have suffered property damage at home please contact the Earthquake Commission on 0800 DAMAGE (0800 326243) and provide details of the extent of damage. Or you can lodge your claim online at www.eqc.govt.nz 

Your residence is covered for the first $100,000 (plus GST) by the EQ portion of your domestic insurance policy. If the damage is assessed to be greater than $100,000 the balance will be covered by your insurer. The EQC will also cover the first $20,000 (plus GST) of contents and the insurer the balance thereafter.

For further information, please contact:
Michael Kohing
DDI: 03 345 8858