Case Studies

Breach of Policy Warranty	Business Interruption	Definitions are Vital
Entitlement to Alternative Accommodation	Orchestrating a claim	Sets and Pairs Clauses

Business Interruption

An electronics manufacturer in Hatfield had suffered a robbery. All their computers had been stolen and, not only was the administration interrupted, production itself, which was closely controlled by computers, was halted. Their insurance cover was good and the sum insured was sufficient to enable them to replace all of the hardware and software. But the problem was that, since the software was bespoke, replacement software could not be obtained and the systems recommissioned for at least ten days.

This meant that orders could not be fulfilled on time and since, for some of them, time was of the essence, some orders were lost and some customers who had had to find an alternative source, would simply never come back.

The preparation of a Business Interruption (sometimes called "Loss of Profits" or "Consequential Loss") claim is an inexact science. The claimant has to show how much business he has lost as a result of the insured event – in this case the theft. But by definition that entails dealing with an abstract - trying to show what would have happened had the theft not occurred. One needs to take into account trends, both of the business itself as well as external factors.

However accurately the figures of lost business are presented, it is likely that the Loss Adjuster - engaged by the Insurance Company - will seek to reduce the loss and thereby his principals' outlay. The Adjuster may contend that assumptions used in the preparation of the figures are incorrect or that trends are not accurately interpreted. In this case, we were able to bring to the claim considerable accountancy experience so that the claim was presented in a professional manner and one that conveyed to the Loss Adjuster that the scope for him to reduce the claim was considerably restricted. He did of course try to reduce the claim in several ways but by our vigorous negotiations, the client ended up receiving several thousands of pounds more than would have been the case if he had not engaged us.

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