A true story of how good insurance works
Lorega in Action

Kevin was a dry cleaner who like most people, bought insurance because it was sensible to do so, but never really thought anything serious would happen to his business.

Spa Brokers of Tonbridge had looked after his business for many years and he felt secure in the knowledge that they knew and understood his business, being specialists in the insurance of dry cleaners.

One evening, Kevin received the phone call he thought would never happen – the police were calling to say that his business premises were ablaze. An electrical fault in an ordinary single-phase socket had caused a fire which spread and ruptured a mains gas pipe where escaping gas ignited and acted like a flamethrower! By the following morning, all that remained were the stone walls and even 24 hours later these were still at a temperature of 70 degrees Celsius!

Kevin said: -“When this happened it was utterly devastating and initially we were both in shock. I turned to my broker, Charles Foulkes, who I had only really ever spoken to on the telephone, but I expected him to have the answers and know what to do. After the initial meeting, Aileen & I could see a way forward & were able to reassure our customers that we would continue to trade. There is no way that I would be able to put the claim together & deal with the insurance company & their Loss Adjuster while maintaining the level of work needed to stop our customers going elsewhere. Basically I paid my money trusting that all would be well - I'm glad that I did.”

As soon as Kevin spoke to Charles Foulkes at Spa, arrangements were made for him to come to the scene of the disaster even though this was more than 250 miles from Spa’s office. Spa also rolled their “Loss Recovery” service into action, an optional extra on Kevin’s insurance that only increased the annual cost by less than 5%. This provided a professional Loss Adjuster to work exclusively for Kevin in organising, presenting and negotiating the claim on his behalf. (Loss Adjusters appointed by the insurer, primarily work to protect the insurer’s interests).

Once the Loss Recovery Adjuster and Charles Foulkes had attended, they were able to reassure them there were no reasons to question the validity of the cover and made arrangements for the insurer’s Loss Adjuster to meet on site the next day.

They also gave clear guidance on what were priorities. In the circumstances of this particular claim, the first priority was to ensure there were alternative facilities for customers with other cleaners. Secondly, to start seeking alternative premises and thirdly, to start putting together a list of the damaged items. The Loss Recovery Adjuster assisted in turning the list into a formal claim presentation and identifying purchase and replacement costs.

One issue at first caused considerable worry but was quickly turned around to create an advantage. The cost of replacing all the equipment as new, including installation and debris removal, was going to be more than the amount insured. This means that any claim settlement would be scaled down in direct proportion to the under-insurance. However in this case, the equipment was a “total loss”, meaning that nothing could be salvaged from the wreckage. Once the insurer was satisfied that the loss exceeded the amount insured, they were happy to release a cheque for the amount insured in which put Kevin in a strong position to negotiate good deals on replacement equipment.

Finally, Kevin had invested in a well-known franchise dedicated to restoration dry cleaning. Ironically, this meant there were clothes and soft furnishings on the premises that had been rescued from fires and floods elsewhere and which Kevin and his team would have been engaged in bringing back to an acceptable condition. Because the insurance cover had been arranged with this extra work in mind, these customers were actually covered for the value of their property before they were damaged in the first fire or flood. In other words, it was assumed that they would be capable of being restored, so protecting the reputation of the franchise organisation in the all-important insurance market.

All in all, the combination of a broker who understands the industry, the assistance from Loss Recovery, the specialist cover arranged and the hard work put in by Kevin has helped prevent the disaster becoming a catastrophe.

Charles Foulkes is Branch Manager and SME Schemes Development Manager at Layton Blackham Insurance Brokers Ltd authorised and regulated by the Financial Services Authority.  www.layton-blackham.co.uk