Disaster strikes:

Saturday 8th February evening: an intense storm, an East Coast low, sweeps through the northern suburbs of Sydney. Typical damage and little media coverage.

Sunday 9th February 4.45 am: the head baker arrives at the Franks’ manufacturing plant. No power. An urgent phone call to David & Anne Franks.

Sunday 9th February 5.25 am: David conducts a torchlight inspection. Extensive ceiling damage and the floors are starting to lift. Sharp expletive.

There is no way they will be doing any baking today. Or anytime soon at this factory.

And they have eight outlets waiting for freshly baked cakes, pies and bread ready the early morning Monday rush-hour.

With nothing to sell.

Sunday 9th February 5.45 am David makes an anguished, desperate call to Sam Woods, his insurance broker.

Sam Woods had been working with David and Anne since they opened their first onsite bakery shop. Through long hours, hard work and perseverance their business had blossomed.

It could have been catastrophic.

Their Salvation #1 the insurances

However, Frank and Anne regularly met with their Sam and kept him informed on how their business changed. Which meant that Sam had set up their business interruption insurance to cover losses across all sites, rather than a specific policy for loss of Income from each.

That one small difference in how the policy was structured was critical. 

It meant that rather than being forced to lodge a claim of losses per location, or, being limited to 20% of the operating losses from the eight retail store sites, they could claim the total losses across all locations.

At $17,000 a day that was a big deal.

Sam worked with the insurer and met with the assessor on site to confirm this claim was more than just a loss of power claim. A loss of power claim would have resulted in a 48-hour waiting period for loss of income.

But Sam was able to confirm that the damage was more than just a loss of power claim. Because of that it meant rather than a two day stand down excess:  $34,000, they only had a $500 excess.

Lastly, Sam had made sure that their business pack insurance included $150,000 of working cover. Rather than the typical $15-20k included on a standard business pack. This extended cover will be critical when they re-open and look to attract customers back in store.

Their Salvation #2 disaster recovery

Although Sam had successfully curtailed their immediate losses. David & Anne still had big headaches. They had the assessors to deal with, in which Sam acted as their advocate ensuring they got all they were entitled.

They also had to think through the different options in front of them: Should they shut down some locations? Should they buy in baked goods? Should they resume onsite baking at some sites? Should they find a new factory?

Each of these with different implications and costs.

Sam spent a full day listening, acting as a sounding board and giving them disaster recovery templates to help. Frank and Anne were able put together a recovery plan, giving them some peace of mind.

The one smart thing

It’s early days but David & Anne are now feeling positive about their future, despite having little choice but to close their business for the next 7 weeks. Sleeves rolled up and making it happen.

One of the smartest business decisions they made was working with their broker, as their business grew. So Sam could advise them and give them the right cover to suit their business at each stage.

Otherwise, they would have had interruption cover of just 20% lost income for those dependent retail locations that were not damaged. And only $15k to spend on a back to business campaign rather than $150,000.

They would have struggled through the disaster recovery on their own and may have ended up as a statistic on the number of businesses that fail to re-open after a disaster

Postscript: Monday 17th February David phoned Sam and asked him to quote on all their other insurances…” our other insurers don’t help us; not like you do."