Access to clothing store restricted

Check your policy for the definition of loss. Insurance covers damaged property.

No access, no business

Christine* had an on-line and retail clothing business. Following the Canterbury earthquakes, Christine had limited access to the shop. The building was yellow-stickered by the council, meaning it was only accessible for restricted use, due to safety concerns.

Christine made a claim for material damage and business interruption. Her insurer paid the material damage claim, but said the cause of the business interruption was the inability to access the building, rather than any damage to the building.

Christine’s insurance policy had additional cover for prevention of access. A claim was accepted under the additional cover and it was limited to 10% of the sum insured under her policy. Christine thought this was unfair and said the insurer should pay her an additional $38,000, because the business interruption was the result of damage to the site, and restricted use.

The complaint investigation considered the policy definition of damage to “your property”. Christine only rented the shop premises and she did not insure it. While there was some damage to stock, the main reason Christine could not trade was that she and her customers could not access the building. Christine’s insurer only had to pay out for the additional, but limited, prevention of access cover.

Complaint settled.

*Names have been changed.

See the full case study.