Rackheath businesses learn that it pays to be prepared for the worst
Archant Norfolk Photographic Ã‚Â© 2011
Businesses on Rackheath Industrial Estate are preparing themselves for a battle to claim insurance compensation following last month's dramatic explosion at the site.
"Being prepared for such events means that the business owner has greater control."
The incident has brought the need for companies to be aware of what their insurance policies cover into sharp focus.
The industrial estate was rocked by a suspected gas explosion at KC Cafe on the main access route into the area at around 9.15pm on Wednesday, January 12.
Fortunately no one was hurt in the explosion, but several buildings suffered physical damage, some severe. No businesses on the site were able to get vehicles in or out while emergency services ensured the area was safe, reopening Wendover Road again on the Thursday afternoon.
It is thought the cause was an accidental gas explosion at the cafe, but it will take several weeks for an investigation to come to a definite conclusion.
The trouble that the explosion has caused businesses on the estate – of which there are more than 500 – highlights the need for companies to review the adequacy of their insurance policies to cover business interruption claims.
Branch managing director of Heath Lambert, a national firm of insurance brokers and risk advisers with offices in Norwich, Rod Palmer said: “While a standard insurance policy typically provides cover for financial losses associated with damage to the policyholder’s own premises, losses arising from ‘denial of access’ to undamaged business premises may not be covered unless the policyholder has specified this in the policy.
“We have a number of clients based at Rackheath Industrial Estate. Fortunately, none has suffered severe damage to their premises, but they were unable to trade normally in the immediate aftermath of the incident and this has had a financial impact on their businesses.
“As we had arranged this additional ‘denial of access’ extension to their insurance policies, their losses will be compensated by insurers and we are now assisting them with their claims.”
Access to Rackheath Industrial Estate was restored within 24 hours and the knock-on financial effect to the majority of businesses on the estate was fortunately limited.
However, such incidents can be considerably worse, as demonstrated by the Buncefield oil storage depot blast in 2005.
That explosion was much more powerful, registering 2.4 on the Richter scale and the noise was heard 300km from the Hemel Hempstead area.
In the immediate aftermath, many of the roads adjacent to the terminal were cordoned off by the authorities and could not be entered for some time, just like Rackheath, but with damage on a far worse scale.
Mr Palmer added: “Given the current economic climate we would suggest that business owners ask themselves whether they could bear the costs associated with restricted trading following such an event.
“They should review their insurance programme to make sure it matches the current risks associated with their business and the environment in which they work.
“This type of cover is crucial for all businesses, and is inexpensive to arrange, but it is easy to overlook.
“Those businesses which review their risk with a broker stand a better chance of identifying gaps in their cover.”
No one wants to realise in the middle of a crisis that they don’t have essential information to hand such as contact details for key suppliers, key customers, insurer, staff or utility providers – let alone not having the right insurance.
That is why insurance giant Aviva offers small and medium enterprises (SMEs) a free download of a template to use to create a business continuity plan.
David Bruce, commercial products manager at Aviva, explains: “A disaster or crisis can strike a business at any time and failing to plan for such an event can undo years of good work and hard trading in an instant.
“If the worst does happen, then having a business continuity plan in place may just be the difference between your business recovering or failing.
“Consider, for example, the effects of the recent bad weather on businesses.
“Some may have had to close unexpectedly because of freezing pipes or operate at a much lower capacity because staff or suppliers could not get to them.
“Being prepared for such events means that the business owner has greater control over a situation and this can take away some of the pressure at what is likely to be a stressful time.
“We have designed a new SME business continuity plan (BCP) template so that we can offer all types of businesses a quick and easy way to create a plan. Whilst it may not be able to stop a serious incident happening, it can certainly ensure a smoother return to normal trading afterwards.”
The Aviva BCP document, Business Continuity Planning for Small Business, is free to download from: https://help.aviva.co.uk/risksolutions/business-continuity/BCP_004 for free access.
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