Due to the Coronavirus restrictions, many businesses are having to temporarily close to limit the physical exposure to the virus. This is changing the way businesses are able to operate or normally function. Some businesses have been instructed to close their doors, some have been directly or indirectly impacted by the change in social activity, or by changes in purchasing practices, resulting in these businesses temporarily closing to limit financial impact.
At the same time, insurers have become highly risk adverse to unoccupied businesses. Unoccupied premises present a heightened risk profile as they are susceptible to theft, vandalism, malicious damage, arson, undetected need for repairs, fire inception for defective electrical, general deterioration caused by adverse weather and water ingress.
Based on claims statistics released by CGU Insurance, one of Australia’s leading commercial insurers, a business is approximately 10% less likely to have a claim during this unoccupied period; however, the average claim size increases by 350% for vacant properties. The National Fire Protection Association in USA reports that during the period 2011-2015 fire claims accounted for 21% of all commercial claims and of these, 19% were intentionally lit and resulted in 86% of the costs of arson related damage claims. Therefore, while only 4% of commercial claims are arson related, they account for 86% of the cost of fire claims. In addition, 50% of fires occurring in vacant buildings are deliberately lit compared to 10% for occupied premises.
Good management procedures can help to prevent criminal attack and reduce the cost of remedial work should a loss occur. These procedures should consider:
- Building Integrity
Check gutters, sewers and drainage are in good working order and not blocked, ensure fire doors are closed. - Housekeeping
No external storage of pallets or combustibles, remove/reduce all vegetation on site, clean processes of all combustibles, ensure vermin treatments are up to date. - Security
Ensure all doors and windows closed and locked, CCTV is operational (if present), security alarms functional, remove or secure all valuables on site, e.g. cash, vehicle keys. - Fire Service
Ensure all fire detectors and sprinkler systems (s) are operational, ensure fire alarm system is functional. - Plant and Equipment
Shut down plant, equipment & processes, isolate gas and water supplies, isolate power, drain all liquids and clean process lines, make sure all openings are stopped to prevent ingress of dust, insects and vermin, ensure maintenance schedule is followed & all missed maintenance tasks are logged to be addressed once operational. - Management Practices
Inform staff/customers of change to business and impact on them, ensure Business Continuity Plan in place, notify local fire brigade & police, notify insurer, postpone any goods deliveries, couriers, etc., take pictures of anything, ensure IT system back up is completed, ensure safe return to work plan in place for staff.
Although insurers are trying to be supportive of businesses during COVID-19, unoccupied risks are still difficult to place, and good management procedures are mandatory if cover is available.