The Insured is a car rental business which suffered a loss as a result of damage caused by a cyclone in 2020.

The Insured had cover for claims preparation costs and they appointed Your Claim to prepare the claim.

The Insured suffered damage to :

  1. Property – Buildings and Contents – Insured under their ISR Policy.
  2. Vehicles – Insured under a separate motor fleet policy

The vehicles that were damaged are registered vehicles that the Insured rents out to businesses and tourists.

The cyclone damage to building and contents did not directly affect the Insured’s ability to generate income. The damage to the vehicles was however significant causing the Insured to suffer a Business Interruption loss.

The Claim

Registered vehicles are themselves not insured under the ISR policy however the Section 2 – Business Interruption included the following benefit relating to registered vehicles (which exists in most policies):

Notwithstanding the provisions of Property Exclusion 5, this Policy extends to include loss resulting from interruption of or interference with the Business occasioned by Damage to registered vehicles and/or trailers whilst such vehicles or trailers are at the Premises owned or occupied by the Insured; provided always that this Policy does not cover loss resulting from physical loss, destruction of or Damage to such vehicles and/or trailers whilst they are being used on any public highway or thoroughfare.

Normally the majority of the Insured’s vehicles are not located at the Insured premises but are out on rent. With the cyclone approaching, most people and businesses in the area evacuated and therefore returned vehicles to the Insured’s premises.

At the time the cyclone made land fall, the Insured had a significantly high number of vehicles at the premisesand as a result, over 40 percent of their fleet was damaged.

The repairs of the vehicles was claimed under the Insured’s Motor Fleet policy.

We accordingly prepared and presented the Insured’s claim for Business Interruption under the “Registered Vehicles and/or Trailers” clause of their ISR policy as a result of damage to those vehicles, all of which were “at the premises owned or occupied by the Insured”.

The above extension of cover does not require there to be a Section 1 – Property Damage claim “trigger” however there has to be “damage” to registered vehicles whilst such vehicles are “at the premises” owned or occupied by the Insured.

The Business Interruption loss was calculated for the period required to have the vehicles successfully repaired or replaced and returned to service.

The Insured was also able to mitigate their loss by relocating vehicles from other branches and we included an Increased Cost of Working claim for the relocation costs of those vehicles to and from the affected branch.

The calculation of the claim was complex given it was a partial loss and was also affected by Covid-19. The claim was eventually agreed and paid by the Insurer under the above Registered Vehicles clause.

Takeaway Points

Whilst an ISR policy does not insure the registered vehicles against damage to the vehicles themselves, should the Insured suffer a Business Interruption loss as a result of damage to those registered vehicles whilst they are at the Insured premises, the Business Interruption policy will respond accordingly.

There does not have to be a Section 1 – Property claim “trigger” to activate the Section 2 – Business Interruption claim under the Registered Vehicles damage.

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Representing the Policy Holder