Prevention of access to insured property and business interruption insurance

For most business interruption claims, physical damage has to occur to trigger a claim.

But in the case of prevention of access to insured property business interruption claims, the threat of damage can be enough, says Dorette Oatway, Underwriting Officer at business interruption insurance specialist IUA.

Examples of incidents that could cause prevention of access to insured property could include a fire in a nearby premises, a sewerage leak, a burst water pipe, or a vehicle crashing into a nearby shop front.

“It’s essentially something that threatens to damage a business’ premises and causes authorities to close the road, preventing your client or their customers from accessing the business premises,” she explains.

Prevention of access in action

A recent example shows how a prevention of access to insured property claim might arise.

In this claim, a fire located in a shopping strip in the main road of a small town caused authorities to close the road and turn off gas and electricity supply in the vicinity.

IUA’s client’s premises, which was located across the road from the fire, wasn’t damaged by the fire.

The utilities were restored the next day, however the client was unable to access their premises for four days, due to the potential presence of asbestos in the air.

So even though they were able to re-open their business, the road remained closed for over a month, continuing to affect the ability of customers to access the business.

Dorette says the IUA Interruption Insurance policy covered the business for the loss sustained during the entire period it was affected.

She says another example of prevention of access to insured property business interruption claims resulted from road closures by local authorities during the summer bushfires of 2019-20 when the bulk of the claims we paid, were for prevention of access to insured property.

The IUA difference

While some underwriters include sub-limits for business interruption claims due to prevention of access, the IUA Interruption Insurance policy will pay out to the full policy limit for claims in subject to the policy’s terms and conditions.

Dorette says the IUA Interruption Insurance policy also has no waiting period or time deductible for the policy to begin paying out, unlike other policies that feature a 48-hour time excess for prevention of access.

Another key difference, she explains, is that the IUA Interruption Insurance policy wording refers to prevention of access in the “vicinity” of the insured’s business, rather than stipulating an exact distance such as within a 20km or 50km radius.

“We have avoided specifying a distance, as we believe it could lead to claims disputes. Instead, we rely on plain English and a common-sense approach to what constitutes the vicinity,” she says. 

“In the case of the claims example above, there was only one road to access our client’s business and that road was closed, which meant the client did not have to take the extra step to prove that they experienced a loss of business due to the road closure,” she adds.

Find out more

For more information about the IUA Interruption Insurance policy or approach to prevention of access to insured property, please visit our website or call us on 02 9307 6655.