Marsh has distributed a Client Alert which provides information about insurance claims arising from the Queensland floods for its clients.
The situation: Heavy rains and severe flooding have caused extensive damage to many parts of Queensland and have also led to loss of life. As at Tuesday 11 January, floodwaters in the region had affected some 200,000 residents, forcing the evacuation of thousands of homes and commercial properties, with entire towns submerged and lengths of major arterial roads and highways disrupted.
Whilst authorities have indicated that the ultimate cost of the disaster could exceed A$5 billion, the cost of insurable damage caused by flooding is not yet known.
Production capacity in two of Queensland’s largest sectors, coal and agriculture, is expected to be severely curtailed, with anticipated flow-on effects for the broader economy.
How to prepare for a claim:
While affected businesses will be focused on clean-up and recovery issues initially, it is important to start making preparations for a claim. The claim needs to properly quantify the extent of loss and damage under your property and business interruption
As the floods in Queensland have extended over several weeks and is still underway, clients should also be prepared for flow-on effects from the damage, particularly supply chain disruptions, which could affect or delay the return to normal business
The following preliminary actions should be considered before and during the
lodgement of claims and in consultation with your loss adjuster or claims preparer:
1) Appoint a co-ordinator/key contact
- Request that individuals from the insurer notify your business’ key contact in advance of gaining access to a damaged facility and ensure that the nominated person is at every meeting with the loss adjuster
- Ensure all staff are aware that any requests for access or information are to go through the key contact
2) Take photographic or video evidence to depict:
- An item’s existence
- An item’s condition
3) Quarantine the following pre-loss information:
- Maintenance records for real and personal property
- Fixed asset lists
- All budgets/forecasts
- All historical sales data
- Meeting notes/minutes dealing with plans for business, including capital improvements
4) Where possible, ensure all computer files are backed up and copies removed to a separate site
5) Capture costs
- Maintain a separate voucher package for each claim disbursement. The voucher package should include a description of disbursement, copies of purchase orders, invoices, etc. Allocate a special PO number and ask suppliers to quote this on all invoices 11 January 2011
Create a separate general ledger account or subaccounts for:
- Permanent repair/replacement costs for each damaged building affected by the loss event and track loss-related disbursements by building
- Temporary costs on same basis as above, including unusual vehicle usage
- Costs to mitigate sales loss or impact of damage (eg temporary hire of equipment)
If in any doubt, record it so that it can be reviewed at a later date
6) For all in-house labour, note:
- Movement details
- Additional labor hours, by employee and by building location (if this can be allocated), including a breakdown for straight time and overtime
7) Employees should be instructed to file separate expense reports for all costs incurred relating to the loss event
8) Maintain the following records:
- Chronology of events related to the loss and the impact that the loss has on your operations
- Diary notes of phone call and discussions with customers and suppliers
Contacts: Insurance coverage will depend on a number of factors, including theterms of your policy. If you have insurance questions or wish to notify a potential claim please contact your Client Executive by phone or email. Alternatively, you can contact Richard Lance on (02) 8864 8279 or Glenn Chesworth on (02) 8864 8617. Marsh’s Forensic Accounting and Claims specialists may be consulted and appointed to assist the management of your claim and post-loss recovery.
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