Opportunity From Adversity
After suffering a loss many Insured's turn adversity into opportunity. They insure their property with the intention of rebuilding a similar property if it is destroyed. However most elect to replace their property to a different design, layout, configuration or specification. This may require some contribution from the Insured but often results in a better business.
When replacing property to a different configuration than that which existed prior to the fire documentation is critical. A scope of works, tenders and a critical path of the rebuilding time of the new property will be required to allow the project to commence and demonstrate the property will be reinstated.
However, it is also important to obtain a scope of works, reinstatement cost of the pre-fire structure and a critical path of the rebuilding time which would have elapsed if the building was reinstated to its pre-fire configuration.
This information is critical to the claim. If the actual reinstatement cost exceeds the cost of the pre-fire structure the Policyholder needs to fund the difference. If the actual reinstatement time exceeds that which would have been incurred if the pre-fire structure had been rebuilt the Policyholder needs to fund any ongoing Business Interruption loss.
Author
Published with permission of Claim Solutions Pty Ltd.
Insurance Policy
Country: - Australia.
Policy Description: - Mark IV Industrial Special Risks policy and many Fire Policies.
Insurer: - Various..
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