Is Your Business Bomb Proof?

The explosion last week at The Giraffe restaurant In Exeter and later armed arrests in Plymouth have inevitably caused serious concerns throughout the Westcountry. There has been a feeling that “If it can happen here, it can happen anywhere”.

Initial estimates suggested that businesses in Exeter lost up to £2million in trade and their insurance premiums are likely to increase significantly. It certainly highlights the importance of thorough risk assessment and proper insurance.

So what can you do to protect your business?

These days our reliance on computers and other equipment means their failure can severely disrupt business. Even if not destroyed accessing them may prove to be impossible. So it is important to develop and implement a plan to help you cope with major disruptions-a disaster recovery plan. The plan should concentrate on critical business functions and lay out a clear timetable and plan of action to get your business back on track.

Some insurers now insist on a disaster recovery plan and indeed some will help you to prepare it. Many companies will insure you against damage caused by terrorist acts but it is important that you check exactly what you are and aren’t covered for.

Common business interruption extensions to insurance now available include prevention of access, loss of attraction and police action.

Prevention of access cover kicks in where access to premises is prevented due to damage to third party property in the vicinity of the premises.

Loss of attraction cover applies where businesses operate in the vicinity of a major attraction and damage at the attraction is likely to reduce the number of customers at the policyholder’s premises.

Police action cover is likely to apply when businesses are closed or customers are prevented from visiting the premises by the police due to damage or disturbance in the area as happened in Princesshay.

Incidents like the bomb in Exeter last Friday highlights the need for the best advice for your insurance policies to cover all possible angles.

If you were affected by the explosion you should check your insurance cover for property damage as well as other losses such as prevention of access, loss of attraction, police action and other risks.

Keep clear records with supporting evidence detailing all of your losses and seek advice from your insurance broker and/or lawyer as to what you can claim.

If you were not affected this time, then now is a good time to review your procedures and to speak to your broker about the adequacy of your current insurance.

Statistically 80 per cent of businesses affected by a major incident close within 18 months and 90 per cent of businesses that lose data from a disaster are forced to shut within 2 years. The adage “Failing to plan, is planning to fail” is only too true in the case of disasters.

Kelvin Farmaner is a Partner with Foot Anstey’s Insurance Litigation team.

Published 27/05/2008. The author of this article is Kelvin Farmaner