Surviving disaster
Page 34
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Afire is a devastating blow but need not be mortal, for there's a form of insurance that can see operators through such catastrophes. John C. Vann explains
THE HAULIER has something of the old-time master mariner about him. Master of the road, in absolute command of his vehicle, the haulier travels the country in the spirit of pure enterprise seeking loads wherever and whenever he can.
Such an entrepreneur fears little — and with reason. Daily he faces and overcomes such problems as the overcrowded British roads, obsolescent docks, a tortuous legal system, inadequate warehouses and the minefield of labour relations.
Yet even the Frobishers and the Drakes feared some things. One of them was the peril of fire. Many an enterprise has come to an untimely end with the destruction of a fine merchant ship by fire. Many a splendid dock warehouse, full of the treasure of the Indies, has been lost to fire.
Today's haulier faces the same broad problems. In spite of the care with which he plans his office, despite the attention he gives to the layout of his warehouse, and despite the close supervision he gives to the mechanics in his workshop, fires still happen.
Fires can be devastating. Too often an entire premises with the goods, the office records, the vehicles and all the garage equipment are destroyed. This can ruin a business. One day it is a profitable enterprise; the next it is transformed into a smouldering ruin.
Nor does the problem end here. No haulage depot can operate successfully if its access road is blocked because of a firedamaged building in the vicinity. Time is vital and the closure of a road, even for just a week, would inconvenience a busy haulier and possibly lose him contracts.
Then what is the position if the vehicles are destroyed on the road or at some vehicle park?
If the vehicle is, say, a standard, flat, then a replacement can probably be obtained. But since fires invariably occur at the worst possible time, will that flat be instantly available? If the vehicle is of a special type, the problem is greater. It may well need reconstruction — and that can take a very long time. Unfortunately, the customer cannot or will not wait and so the contract is likely to be ost.
Yet there is insurance cover available in the form of business interruption insurance, though you may have heard of it by the rather inadequate name of consequential loss insurance. But my feeling is that not enough hauliers — even though they may know about it — have recognised it as applying to them. How many hauliers could face fire-damaged premises, if not with equanimity, at least with the knowledge that they will have proper financial support in the reconstruction of their business? Probably all too few.
Bearing all this in mind, Provincial Insurance Company has introduced its new interruption policy for hauliers. This contract is a simple package designed to provide the smell to medium-sized haulier with essential cover at a reasonable cost with the minimum of inconvenience.
The perils covered are fire, lightning, aircraft and explosion. "Premises" insured naturally include the haulier's own premises and vehicles on such premises. But also included are neighbouring premises which hinder or prevent the use of the haulier's own premises. For instance, a nasty fire might have occurred at a neighbour's factory or perhaps some kind of explosion with a collapsed wall blocking the road outside, thus possibly "fencing in" the haulier's vehicles. Additionally coming under "premises insured" are the haulier's own vehicles in Great Britain and Ireland, the interruption benefit being up to 10 per cent of the sum insured. A claim here might come from a case where a vehicle suffers a complete burn-out while on the road, or even while parked somewhere.
Care should be exercised when fixing the sum insured, which is based on the gross income of the business less the cost of fuel, lubricants, tyres and bad debts. The haulier's accountant should be consulted here as a safeguard, preferably in conjunction with his insurance adviser.
As regards the actual cover, this is full gross income, plus increased cost of working, which can be described as additional expenditure incurred in order to avoid or diminish the amount of the claim. For example, it may be necessary to rent temporary premises or to hire plant or equipment to enable the business to continue in operation. It may be reasonable, or even necessary, to incur expenses in carrying on business and making temporary arrangements. But this additional expenditure must be necessarily and reasonably incurred for the purpose stated.
An indemnity period has to be chosen. This should represe the estimated maximum perk during which the effects of ti cause of the interruption a going to be felt. In other worc how long is it going to be befo business is back to normal?
Consideration must be givi to the time required for demo tion and site clearance, for r building, delivery and install tion of machinery, fixtures ar fittings and the replacement stock. Allowance must be mai for possible unforeseen dela' such as those caused by indul Hal disturbances, shortages al the like, and also by probler arising from planning perm sion and building licences.
The business interruptii does not end when the buildil and its contents have be reinstated. Time must I allowed to bring income up normal level and for recoverii contracts and customers pc sit* lost during the interruptii in trading.
The majority of indemn, periods are for 12 montt Shorter periods than 12 mont are regarded as insufficient give full protection. Howevi hauliers would be wise to co sider carefully whether a long period would be advisable. I demnity periods of 18 montf 24 months or even longer a not uncommon.
Under this Provincial policy, flat rate is charged, dependir on the length of the indemni period. For 12 months the ra per £1,000 of cover is £1.25, wi the rate falling to £1.15 for months and to E1 for 24 month It should be stressed that th interruption policy cannot me the needs of every haulier. If ti haulier's income is in excess £350,000 a year or if he works fl a particular customer or if t needs a particularly wide ranc of perils or if he carries lo flash-point liquids or if he earr more than 25 per cent of his ii come from his storage war house, then his needs are col sidered as being special ar require special attentiot However, the Provincial prepared to quote for the "special" cases.
One attractive feature is th. the premium can be spread ovi the year, using the Proyinci instalment scheme. This heir the cash flow — on "cheac credit.