Are Interest Costs claimable as an Increased or Additional Increased Cost of Working?

This is a question often put to me as some loss adjusters and insurers push back when it is claimed.

If I start with the actual wording from the Australian Industrial Special Risks policy which is found in many other policies, it reads:

“The Insurance under this Item is limited to Loss of Gross Profit due to: (a) Reduction in Turnover; and (b) Increase in Cost of Working, and the amount payable as indemnity there under shall be:…

…The additional expenditure necessarily and reasonably incurred for the sole purpose of avoiding or diminishing the reduction in Turnover which, but for that expenditure, would have taken place during the Indemnity Period in consequence of the Damage, but not exceeding the sum produced by applying the Rate of Gross Profit to the amount of the reduction thereby avoided.”

If the Insured needs to pay a deposit on replacement stock or machinery or even make a fortnightly pay-roll and need to borrow funds to keep the business afloat, while the business has been disrupted due to an Insured Event, or because the Insurer has not made sufficient progress payments to allow them to fund this expenditure from insurance monies, then to me, in any interpretation of the Increased Cost of Working definition, the Insured is entitled to claim the additional interest that they have incurred in consequence of the damage.

I stress, the interest expenditure cannot be existing interest, for that should be included as an Insured standing charge in any event and be fully covered under the Item No. 1 (a). The two tests, being sole purpose test and economic limit test, obviously would both apply.

In view of the relatively low interest rates that are currently being charged around the world, I do not expect that the interest charges, unless the claim was protracted for an extended period of time and the amount borrowed was significant, would not pass the economic limit test. If it did not, or the Insured only had additional increased cost of working cover only, then the Insured would be able to make the claim under “Item No. 4 (Additional) Increased of Cost of Working”.

This reads:

The insurance under this item is limited to increase in cost of working (not otherwise recoverable hereunder) necessarily and reasonably incurred during the Indemnity Period in consequence of the Damage for the purpose of avoiding or diminishing reduction in Turnover and/or resuming and/or maintaining normal business operations and/or services.

Here, the coverage goes further and states that the expenditure only has to be made to maintain normal business operations. Therefore, it goes without saying that if the insured had to borrow additional funds to maintain normal business operations and/or services then the interest paid to do so would be an additional increased cost of working.

Claims for this item are a relatively new phenomenon, typically brought about by the fact that some insurers are no longer willing to make reasonable progress payments to assist the insured during the initial phases of a loss. In fact, some insurers insist that the Insured incur the costs under Material Damage before they will reimburse them. In such cases, if their insurer has failed them and they have had to rely on the banking or other finance sector and incurred a cost to do so, then surely this is a legitimate Increased Cost of Working. To deny such a claim is a clear case of wanting the cake and eating it too.

To me, this is such an obvious increased cost of working, I cannot understand why it is being refused so often.

Perhaps, if it continues the only alternative will be to have it tested by the courts, but to me, it is a lay down misere.


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Meth Labs pose an additional risk for Property Owners and Real Estate Agents

A staggering number of rented properties in Australia and New Zealand are being used for the illegal manufacture of the drug Methamphetamine turning the home into a clandestine Meth Lab.

The question then arises what steps are reasonable for a property owner and or their real estate agents to ensure the property is free from any contaminate left by such an operation. Some matters It is not always possible to see physical evidence during a routine property inspection.

Is it still reasonable to carry out a physical inspection alone or is it now prudent to carry out a test every time a tenant exits a property before a new tenant is allowed in. Is a home test available from some pharmacies enough? or should an expert in testing for the residue of a Meth Lab be engaged?

Then, of course, there is the question of insurance. Just looking at the Real Estate Agent for a minute, a large number of Professional Indemnity Policies exclude losses arising from contamination. You need to check for any endorsements added to the schedule that may take away the cover that appears to be covered in the policy itself.

I therefore urge insurance brokers to check the policies and schedules they have with their real estate clients and offer such clients to determine if this is an exclusion or not. Do not forget that you can always use the ‘Search by Product Feature” option in LMI for either the Australian or New Zealand policies.

To learn more about the risk caused by Meth Labs please check out Steve Manning’s special report on his Insurance Bites YouTube channel. I enclose a link here for your convenience.

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When does the Indemnity Period end?

At LMI Group, we have an issue which comes across, almost in waves, in regards to a number of claims which needs to be addressed before the next flavour of the month adjustment to reduce an Insured’s claim.

The one we have just overcome is where the adjuster has made a “notion” adjustment, without explaining the basis for it. Now, we have come across on a number of claims, particularly involving restaurants, clubs and hotels is for the indemnity period to be cut off by the loss adjuster and then the Insured being asked to prove that the loss extends beyond the period allowed by the adjuster and then also prove that the ongoing disruption is as a direct result of the damage or other insured event which gave rise to the initial claim.

One of the great frustrations for us is that often this judgment call is being made by a Forensic Accountant or an adjuster who has not been to the site, met the insured, or if they have, it has been only one short visit. Without understanding the insured’s business, their assumption that the business should have been back to normal may well be completely ill founded and at times appears to be linked to the fact that the initial reserve placed on the disruption by the adjuster or forensic accountant has proved to be inadequate. That means the claim is then being adjusted within the confines of that initial reserve.

With this background, I thought that it was appropriate to review the typical Business Interruption cover and in particular, to look at the onus of proof issue.

There are differences in the market with business interruption policies and so, for the sake of this exercise, I will use the Industrial Special Risks (“ISR”) Mark IV Modified wording.

The trigger for a claim under Business Interruption under the Mark IV ISR reads:

In the event of any building or any other property or any part thereof used by the Insured at the Premises for the purpose of the Business being physically lost, destroyed or damaged by any cause or event not hereinafter excluded (loss, destruction or damage so caused being hereinafter termed “Damage”) and the Business carried out by the Insured being in consequence thereof interrupted or interfered with, the Insurer(s) will, subject to the provisions of this Policy including the limitation on the Insurer(s) liability, pay to the Insured the amount of loss resulting from such interruption or interference in accordance with the applicable Basis of Settlement.

Assuming that the loss falls within the triggering provision of the policy, it advises that the claim will be settled in accordance with the “applicable Basis of Settlement”. The Basis of Settlement reads:

The insurance under this item is limited to actual loss of Gross Profit due to: (a) Reduction in Turnover and (b) Increase in Cost of Working and the amount payable as indemnity thereunder shall be:

(a)   In respect of Reduction in Turnover:

the sum produced by applying the Rate of Gross Profit to the amount by which the Turnover during the Indemnity Period shall, in consequence of the Damage, fall short of the Standard Turnover.

(b)  In respect of Increase in Cost of Working:

the additional expenditure necessarily and reasonably incurred for the sole purpose of avoiding or diminishing the reduction in Turnover which, but for that expenditure, would have taken place during the Indemnity Period in consequence of the Damage, but not exceeding the sum produced by applying the Rate of Gross Profit to the amount of the reduction thereby avoided.

In both Section (a) and Section (b), the policy makes note that the Insured is to be indemnified during the Period of Indemnity. It is therefore important, that we look at the definition of Indemnity, which reads:

INDEMNITY PERIOD: The period beginning with the occurrence of the Damage and ending not later than the number of months specified in the Schedule thereafter during which the results of the Business shall be affected in consequence of the Damage.

In Summary, this definition states that the Policy starts on the date of the Damage, which may be before any disruption to the business starts and ends when the business is no longer effected in consequence of the Damage, or the number of months stated in the Schedule.

Often, it is a case of res ipsa loquitur which simply means, the facts speak for themselves.

Naturally, as part of the calculation and/or assessing process, the person preparing the claim and/or assessing the claim, would carry out tests to determine whether or not some other factor has arisen which has caused a downturn in the business, and for that matter, may have caused an upturn of the business, unrelated to the Damage which would have taken place had the Damage not occurred.

The reasoning behind this, is that at its heart, the traditional business interruption policy is a contract of indemnity. That is, of course, to put the Insured back to near as money will allow to the position they would have enjoyed but for the loss. I stress that this is the underlying principle of the majority of business interruption policies in the market, however, there are some policies which are in fact agreed value policies, where the Policy stipulates a formula which may well over or under indemnify the insured.

To ensure that the principle of indemnity is maintained, the policy contains what to me is arguably the most important clause in the contract of insurance and the one that creates the greatest conflict between the insured and the insurer.

This clause is the adjustments clause, which reads:

Adjustments shall be made to the Rate of Gross Profit, Annual Turnover, Standard Turnover and Rate of Pay-Roll as may be necessary to provide for the trend of the Business and for variations in or other circumstances affecting the Business either before or after the Damage or which would have affected the Business had the Damage not occurred, so that the figures thus adjusted shall represent as nearly as may be reasonably practicable the results which, but for the Damage, would have been obtained during the relative period after the Damage.

While the Indemnity Period is not specifically mentioned in the clause, what is in effect occurring when the indemnity period is being cut short, is that the insurer or their agent is suggesting that the turnover that would have been achieved had the business not been affected by the Damage, would have been reduced for some other event, and as such, the period of disruption caused by the Damage is at an end.

Just as an insurer would take a dim view of an insured who came along with an unsubstantiated request to increase the standard turnover of the business, I’m of firm belief that if the insurer or their agent suggests that there is a special circumstance that reduces the standard turnover, then the onus of proof is on the insurer to prove this and not simply make an unsubstantiated claim that the business ought to have been back at that point.

I’m the first to admit that the adjustments clause is not an exact science and that no one can ever be 100% certain as to what the business would have achieved but for the loss, other than in the rarest of circumstances. There is always room for negotiation but both sides ought to provide some logical reason for any adjustment that they wish to make to the standard turnover. For the sake of completeness, I include the definition of standard turnover which reads:

STANDARD TURNOVER: The Turnover during that period in the 12 months immediately before the date of the Damage which corresponds with the Indemnity Period.

To further put this into perspective, the position I hold is that it is inappropriate for an insurer or their agent to simply say that the business should have been returned to normal, say a week after a restaurant reopens when the business had a track record of performing well prior to the event and has recovered to their pre-damaged position at a period longer than was expected by the insurer for the Indemnity Period to be cut off unilaterally and the Insured required to prove that the ongoing disruption beyond their stipulated cut off point is as a result of the Damage.

In fairness, how can this ever be proved?

It leaves the insured in a helpless position, starved of cash and with no logical way they can prove the ongoing loss, other than for the fact that their revenue has not returned to normal. Whether I am acting as a loss adjuster or claims preparer, my role would be to carry out an analysis and look at industry figures, the possibility of new competitors entering the market and all other factors to see whether the position I have adopted in my calculation of the claim is fair and reasonable to all parties concerned.

I have never attempted to cut off an Indemnity Period without any reasonable foundation for doing so. It appears that we will be taking at least one of our current claims to court to examine this whole issue of onus of proof and I look forward to the outcome which may resolve this, to me, inequitable position that many insureds are confronting.


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A question that I have answered hundreds of times – the pros and cons of insuring for indemnity

In the last two days I have had very similar questions and thinking about it, it would be one of the most common questions put to me and I am surprised I have not posted an article on it before now.

Good Morning Allan,

Please can you advise if you have an article advising the Pro’s and Cons of insuring Commercial Buildings on an Indemnity vs Reinstatement basis

I have a sawmill client under attack and would appreciate any brief comments (we presently have them on Reinstatement.. the attacking quote is on Indemnity.

I would appreciate hearing from you as soon as possible accordingly

Thank you and Regards

Chris [surname and email provided]


My response to this one is as follows:

Hi Chris,

The only pro in insuring for indemnity is a saving in premium but the issue is at what cost to PROTECTION.

The vast majority of claims are partial losses and in Australia it is more often weather related than any other peril. Having said that, fire is a very real risk for a sawmill.

Let us assume the roof of the sawmill is damaged in a hail or wind storm and requires replacement. I will leave out water damage to machinery for the moment.

If the policy is underwritten on an indemnity basis then the Insured will not get a new roof but will have to contribute to the cost based on the age and condition of the roof. They are in fact their own insurer on every claim for difference between the indemnity value, that is, current replacement cost less an allowance for its age and condition and its replacement value.

As a claims guy, I have learned a couple of things. One, Murphy’s Law dictates that the loss is going to happen at the worst time for the Insured. This means when they are low on cash or are extremely busy and turning back to their machinery and contents they do not have time to mess around looking for second hand equipment and if they do they find there is nothing decent available and after a frustrating delay find they have to put their hand in their pocket to pay for new equipment.

By insuring for full replacement value with extra cost of reinstatement, they can sleep well at night knowing they will not have some hidden cost that could come along any time during the year and bite them should a loss occur to their building or contents but they have the best cover which will replace the items new for old.

The Insurance Industry invented Reinstatement and Replacement not as a gimmick but as a way to provide better protection for their clients, to allow them to recover from an insured event quicker and give them the best chance of surviving the inevitable disruption. Remember it costs insurers more each claim to provide this great coverage.

Insurance has never been cheaper. Fire Service Levy is not imposed in Queensland. Every Insured needs to understand that the cost of the insurance is not the total cost of risk. It is the cost of transferring the risk away from the owners of the business to an insurer in the event something has happened.

When a claim occurs, the Insured will not be thinking about the small amount of premium they saved, they will want the best insurance coverage, the best claims service with an insurer that has the funds to pay the claim.

Business owners the world over are optimistic. The most common thing said to me on arriving at a claim is: I never thought it would happen to me. Bad things happen to good people every day. Looking at the aftermath of Cyclone Debbie, we have heaps of clients who are saying “if only”.

I hope your client takes the prudent course of action and insures for full replacement. I know that I do.




One final point, if you are the attacking broker, please consider the risk you are asking your clients to take on by taking this approach. Are you really acting as a trusted adviser if all you are doing is giving them a second rate product!

I appreciate that not everyone is as risk adverse as I am but we owe it to our clients as professionals to spell out the risk honestly to them.

Let’s make insurance great again.

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Business Interruption Issues Series – Part 5 – Time Excesses – Part D – Possible Solutions

After addressing 3 common problems in time excesses last week, I return to the topic with some possible solutions.

What is the Answer?

I would suggest there are several answers to the problems of time deductibles, and would like to explore three with you.

The first is to replace the excess/deductible with a franchise. If the insured business is disrupted due to an event for a period less than the franchise of say 1, 2 or 3 days, then the loss will be at the full expense of the Insured. If it extends beyond the period of the franchise, then the entire amount would be met by the insurer. This would mean that the Insured would carry the risk for minor periods of disruption, but beyond that they would have the comfort of having full insurance subject to adequacy of insurance etc.

I appreciate the insurance industry need not be there to protect short term, what we call working losses. The cost of doing so in just calculating such losses often proving they are not real losses in any event but just delayed sales would increase the cost of business interruption insurance prohibitively. However, the cost of working out a time excess can be significant and cause the Insured to feel cheated. I know that is how I feel every time I put in a health insurance claim when I consider the premium I pay each year.

I would rather see the client get the amount rather than it go to loss adjusters and claims prepares trying to agree an equitable allowance.

Some underwriters are worried that an insured can manipulate the stop time and so get a claim paid. I think in disruption such as in failure of public utilities, or closure by public authority, the Insured has no chance to influence when the issue is resolved. As such, I do not see this as an issue. It has certainly not come up in the claims I have handled under business packs where time franchises are more common under high quality wordings.

The second solution is to apply a monetary deductible, which both the Insured and insurer know and understand in advance. I would suspect that this would be easier for the underwriter to underwrite and the Insured would be in a much clearer position as to the effect of the deductible in the event of a claim. It would also reduce the stress and claims handling costs following a loss.

The third alternative is simply a combination of the first two. The monetary deductible would apply after the franchise period had lapsed or it could be the “greater of”.

1.2                 Summary of Chapter

Space limitations have only allowed three case studies to be provided. Underwriters, claims staff and Insureds who lodged a claim following any business interruption claim with a time deductible can provide similar examples of complications arising from their experiences of the interpretation of time deductibles.

At the very least, time deductibles need to be reviewed to incorporate clear details in the policy as to how they should operate. Alternatively, they should be replaced with a franchise, a set monetary deductible, or a combination of both. Food for thought to improve what, in the main, is a very good product.

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Blog question: what is covered under a liability policy when it comes to a product failure?

Other than questions on business interruption, one of the most common questions I get asked of me at conferences, functions and here on the blog centres around the issue of product liability. Many people think that product liability insurance covers the product. It does not. It covers liability arising from a product, that is damage or personal injury flowing from a product.

The following is one such question and my explanation of what is and is not covered:

Hi Allan

Just wished to double check a Liability scenario that a client is faced with:

Insured is a Transport Company as well as a Bricks & Pavers supplier.

Insured supplied some pavers for pool surrounds in October 2011 (supplied to pool construction co)

Insured has been advised (this year) that a number of the pavers are experiencing “salt attack” and that the pavers were sold on the basis of being salt resistant.  The supplier is out of business.

Insured is being asked to rectify the issue – the actual main cost is not the pavers that have been affected but as supplier out of business having to replace all at expected cost of approx $4,000.

Insured has a XYZ Cluster [Insurer and Broker Group name withheld]  Business package.

Liability section exclusions –       

7. Damage to Products    

14. Loss of Use 

16. Product Guarantee

Come into play – just confirming thoughts that there is nothing further we are missing that might write back any potential cover.

Thanks and Regards

Chris [Surname and email provided]

Hi Chris,

On what you have told me there is no resultant damage or injury just the failure of the product. The cost of removing and relaying the pavers is part of the cost of replacing the product.

A combined public and products liability policy is not a product guarantee policy nor is it a product recall policy.

Even a product recall policy is not going to cover the cost of the recall if there has been no injury or likely injury to a third party. In this case it is simply a discolouration issue.

What we do not know is there some other cause that has effected the pavers or if there has been no other issues. The problem could be incorrect cleaning, harsh chemicals, an unusual location, problems with a water leak from the pool etc.

When you say there supplier is out of business I now understand that it is the actual manufacturer of the pavers. There is a message here for every retailer and wholesaler here. The products that they sell and or install has to be a good quality from a reputable supplier as at the end of the day they may become liable with no recourse available to them.

This is a serious risk management issue we see in lots of products such as electrical cabling and other building materials that are not to code, asbestos in imported products, the list goes on. I cannot stress the risk is real businesses face when they take on a new product.

If the manufacturer were to be still around and there is a genuine fault in the product, then if your client was to replace the pavers, then a) the manufacturer should supply fresh products and b) if reputable met the cost of lifting and relaying.

The trouble even then is for $4,000 if the manufacturer says no the cost of fighting it is going to be greater than the amount trying to get back. This of course is all academic as the supplier is no longer in existence.

So summing up, I see the cost of replacing the damage product includes the cost of lifting and relaying the product. This is not covered by the policy for the reasons explained. From what you have advised there is no resultant damage to any other property.

Sorry I do not have better news but this is not just a xyz or cluster thing but would be the same for virtually every public and products liability
policy sold in Australia.




Tomorrow I will post an article on how just to clean bricks or pavers which has the white effervescent powder on them. I shared this advice with Chris as well.

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Oh for the want of a comma

It was only last week that one of my colleagues picked me up for putting a comma before an “and” saying you should never do this.

I explained that who ever had taught them this was wrong and that not only was it it was proper in some circumstances but extremely important to use it correctly where appropriate.

I showed example after example but I am not sure they were convinced and then over the weekend I read an article about this very issue.

Today a broker, Matt [surname and email provided] sent me a link to the same article confessing that he was old school.

The article on ABC News was headed: The case of the $13 million comma and why grammarians are rejoicing. This in turn refers to another article which can be found here:  Click here.

My response to Matt was:

I am both old fashioned and worked damn hard to understand (and get a good mark in English) at night school back in my early 20’s after I realised just how important correct grammar in my profession.

Commas, etc in contracts, legislation etc are critical to getting the intention of the drafter correct.

You do not have to use commas, there are other ways of doing it as well but it is something I and the policy drafting team at LMI agonise over whenever we draft a wording or endorsement and of course in preparing expert opinion reports.

Our claims and legal teams are also trained carefully in this when it comes to policy interpretation.

It does scare me just how much copying and pasting goes on in our industry, spelling mistakes and all, let alone poor grammar.

Thanks Matt for sharing the article.



When I hear people say that you should never use a comma before “and” it reminds me of the other one that is often quoted about never ending a sentence with a preposition. This in turn reminds me of Winston Churchill’s (who won the Noble Prize for Literature in 1953) reply which read:  “Ending a sentence with a preposition is something up with which I will not put.”

English is such a powerful and yet complicated language it probably best to say “never say never”and then check and re-check.


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Buying insurance on Price: Who would be that stupid to recommend that? Perhaps some who should know better!

Yesterday afternoon, Prof Allan Fels was complaining about the difference in price between home and contents insurance policies and advocating people shop around each year. While he is quoted as explaining there are differences between policies, the fact of the matter is that you typically get what you pay for, but it is not easy for the consumer to understand the complexities of the policies, nor the claims service until it is perhaps too late.

Insurance is one of those products that if you purchase the wrong one, it can have detrimental life changing effects. For many people, their home is their biggest single asset. They may have a mortgage over it. A single event can destroy the home and then what. Yes you saved a few hundred dollars but one policy covers you and the other does not and that apparent saving of say $500, just cost you the entire value of your home and contents.

Even if you get the claim paid by the same company, what is it worth to have one company pay it quickly with minimum fuss, allowing you your choice of repairer, showing great empathy and the other one drags it out and moves you from being a customer to a cost centre. Most would gladly pay 10 times the saving to have the first company look after their claim, but that is a simple decision after the claim. Before hand, too many focus on price as it will never happen to me.

I thought I would just have a quick look at any differences between the two most often quoted policies in the survey. Coles and GIO using LMI  There are two versions here to use. The top one is a detailed comparison in text and the second is using icons. They both show differences in the products which is not surprising.

Policy_Comparison full GIO v Coles

Policy_Comparison icons GIO v Coles

I also attach a comparison of the claims service from LMI Here I have included Allianz as well.

Claims Comparison, Allianz, GIO, Coles

Neither of these sites compare prices as to me that is a long way third after the quality of the coverage and the claims service provided.

I also went on to a non LMI product site which showed what customers thought of the Coles service for home and contents. I cannot vouch for the fairness or accuracy of this site but what is shown here is not pretty.

The whole issue is not simple. In one of the price comparisons quoted by Prof Fels, Allianz comes up the least expensive. This does not mean they have an inferior product. Generally their policies are very good as is their claims service but I for one would never ever ever look at buying insurance on price alone.

What is missing from the Fells argument is the issue loyalty. You would expect that if two people made the same claim and it was grey. If one had been a loyal customer for 5 plus years with a claims free record an insurer would be more inclined to give them the benefit of the doubt and pay the claim than someone who clearly showed no loyalty chopping and changing each year. If Insurers move away from factoring in loyalty and claims experience then they deserve what they get.

Home and contents and car insurance are one thing, when you move to business insurance and particularly professional lines such as professional indemnity and directors and officers insurance, my strong advice is do not shop around on price. Choose an insurer you trust and stick with them. Sustainability of insurance is of paramount importance with these products.

The whole issue is complex, that is why I use an insurance broker even though I know just a little bit about insurance for everything, including my home and contents. Even then, if my broker only came to me recommending I chose a product on price alone, I would change brokers. My broker, does not do that and so I stay with them as they know my business, my home, and my risk appetite. I trust them and they me and I treat them as a trusted adviser.

Sorry for the rant but having handled claims for nearly 50 years, articles the one I read yesterday cause me to see red! They may get a headline but as an economist, I would have thought some consideration would have been given to the cost to our communities, state and federal economies if the wrong insurance is taken out.

Key lesson for any accountant, economist or consumer: Insurance is all about PROTECTION, not price!

I for one wished as much emphasis was made on the difference in petrol prices which is a homogeneous product, delivered well self served, and yet has massive differences. Explain that one for me Mr Fells. When it comes to insurance “oils ain’t oils”.

I am even bold enough to modify Mr Buffett’s often quoted phrase to Price is what you pay, Value is what you NEED when it comes to insurance. 

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Acts of God in Insurance

It amazes me how many times people have spoken of Act of God being both an insured or excluded peril under an insurance policy.

There was even a famous Billy Connolly with this as its theme. My nephew, Jeffery, one of the guys sending me a joke questioned me on it and I thought it was worth setting the record straight.

Despite having read thousands of policies of insurance and being involved in the drafting of 100’s more, I have never seen the words ‘Act of God’ appear in a policy as an insured, or excluded peril.

What it means in layman’s term is:

a completely unforeseeable event where there has been no human intervention

Things such as fire, lightening, earthquake, tornado, hurricane, cyclone, flood, landslip, and the like.

Under policies such as a comprehensive motor vehicle policy, all these perils are in fact, insured. Most property policies, such as your home and contents, business pack or ISR, the vast majority would be insured, although landslip, action by the sea, storm surge and flood may be excluded.

If you are in any doubt as to the cover afforded by the policy which you have in place, I recommend that you speak to your insurance broker.

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What happens when the V8 super cars knock on your door?

Dear Prof. Manning,

I find myself in a difficult situation and have not been able to get any clear guidance, except to contact you. I’ll try and keep it short mainly because I am now thoroughly confused and overwhelmed.

We live in Newcastle, our home is an 1890’s Terrace listed on the State Heritage Register.

We have the V8 Supercar Race touted to be heading up our Street. The track will be 3 meters from our home.  This has never been done before and all the National and International Standards have based their health and safety recommendations on a distance of 30 meters from the track, not 3 meters. I have not been able to get clear information of how Supercars will “adapt” the depth and type of safety barriers, to protect our home, given we are so close to the track.

Supercars and Destination NSW have told us very little except there will be no compensation and that any insurance will be up to us, individually. Council just don’t answer emails.

I’ve spoken to our Home insurer (NRMA) who said our policy still stands but that damage to our home will be done on a “case by case” basis as they have nothing to compare it to. They can’t put anything in writing and they won’t guarantee that damage will be assessed in favour of cover. They then referred me to The Insurance Council, who straight away, sent me on to a phone number for National Insurance Broker register, who then sent me onto The Markey Group in Newcastle, who then gave me advice to speak with LMI Group.

So far, no one can give me any guidance on protection for my Home or the people in it, during construction of the race track which will be extensive or during the days of the race every year. I have not been able to get any quotes, no guarantee’s and very little constructive advice because as they all said, they have nothing to base their advice or cost on and no one is sure who to send out to us, to do a quote. Therefore, who would they send to give us a loss assessment if there is damage and then what would they base that assessment decision on, if this situation has no comparison? Will this car race situation increase the cost of our insurance policies in the future? No answers to these questions either.

Would you have any advice? If we are to pay for an assessor I’d like to know they were the right person to ask. There are many others in our situation.

Kind regards

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