Ask An Expert
Would you like some advice? Please fill in the form below to submit your question to Insurance Advisernet Australia.
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Further below are some questions that have previously been received.
Question:
I run a retail business and don’t understand what business interruption is or how to calculate the amount of insurance I need. Can you assist?
Answer:
Firstly, your insurance adviser should be assisting you with something of this nature. We can give you some general guidance on the matter however.
First and foremost, what is business interruption? Well, in its simplest form, this cover is intended to ensure that, after a loss, the business is put back in the same financial position it would have been had it not suffered a loss.
Then, in terms of working out how much cover you need – basically, we can split your turnover into A, B and C.
A = Truly variable expenses (e.g. purchases)
B = Other expenses that may or may not continue if the business doesn’t trade (e.g. rent, wages, electricity)
C = Net Profit/Loss
In its simplest form, INSURABLE GROSS PROFIT would be calculated as B + C. We strongly suggest you speak with an insurance adviser, however, as business interruption is a tricky subject and you need someone qualified to provide you with some advice specific to your business.
Question:
I work as a tradie and one of my largest clients has asked that I sign a contract before my next project. It mentions insurance on there – is this all standard or do I need to consult a lawyer before signing this?
Answer:
Firstly, if you have any doubts about a contract you’ve been asked to sign you should remember that your insurance adviser isn’t your solicitor, so it may be a good idea to consult your lawyer before signing. When it comes to insurance clauses in contracts, there are a few issues that can arise. Typically, these fall under what we call ‘contractual liability’. This is basically when the contract you sign says you will provide cover for someone else, or indemnify them in some way. Understandably, most Insurers aren’t too happy about their insured clients signing these without prior agreement so it’s always best to give the contract to your insurance adviser before signing it.
Question:
Answer:
This is a very good question and one that many property owners should be asking. Again, it is something that only a professional valuation can really answer properly but there are some general provisions you should be aware of. Firstly, please don’t make the mistake of insuring a building for its retail value. It is the rebuilding cost that makes up your sum insured, not what you can sell the building for. Secondly, it’s also not just the bricks and mortar that need to be taken into account. There is a long list of additional considerations from the access to the property to the availability and current cost of material used as well as any removal of debris, professional fees and authority fees for the current day market as well as taking into account potential future cost escalation. Come claim-time, there are severe penalties for under-insurance so it’s very important that you get your sum insured correct. The best course of action is to speak with your insurance adviser who may be able to provide you with some rebuilding cost estimations or at the very least get a professional to come see you and conduct a proper valuation.
In addition, you might want to go to our LINKS page where we have some additional information on calculating sums insured.
