The catastrophic damage caused by Cyclone Debbie across Queensland and northern NSW in the last week has been devastating for so many families and business owners.
Unfortunately, many retail businesses never recover from these natural disasters. Those who do, often struggle under the weight of massive financial losses resulting not only from damage to stock, merchandise, fixtures and fittings and their physical retail shop or centre, but also actual loss of trade during and after the disaster. Even when they manage to reopen, sales can be heavily impacted for many months as the entire trade area is generally affected, and takes time to recover.
Many retailers in the areas affected by these types of natural disasters are well prepared for the immediate physical impact – boarding up windows, moving anything possible to higher ground and other precautions needed to make sure lives are not in danger. However, it is important, to ensure you also have a solid disaster management plan in place around your lease and other aspects of your tenancy to help with the clean up once the immediate danger to property and lives has passed.
Here are a few points from The Leasing Department to help lessen the longer term impact and improve your chances of a quicker recovery.
Know your lease
Your lease will usually include a section covering your responsibilities as a tenant around insurances. It will require you to have insurance cover with a reputable insurer for the usual risks, covering the tenant’s property within the premises for its full value, while at the same time requiring you as the tenant to indemnify the landlord against any action or demand due to any damage, loss or injury caused by various situations such as natural disaster.
The lease should also cover the responsibilities of the centre or premises (or both) should your tenancy be damaged or destroyed and as a result, you cannot use or access the premises.
Flood, Act of God, or Natural Disaster? Know your insurance
You will need to lodge a claim with your insurance company, not your landlord, as soon as possible after the disaster. Contact your insurance broker or your insurer direct to open a claim and ask for their requirements for a claim to be processed then set about documenting all damage.
Many insurers do not cover flooding, so the first point of business is determining your cover, and whether the damage is caused by an ‘Act of God’, a ‘Natural Disaster’, or what the insurers classify as ‘flooding’. Your first priority has to be to have those tough conversations with your insurer to make sure they cover you for the damage.
Your landlord is in the same situation as you and will also be working with their insurers to begin a claim for any damage to their asset. Contact your landlord as soon as possible to get an understanding of their claim and expected time-frames for any repairs needed so you can get your shop trading again and return to full capacity as quickly as possible. Time frames for your landlord’s insurers to assess and provide cover for repairs to the building could prevent you from trading and may also have an impact on your own claims.
Hopefully, your insurer has agreed the event is covered under your insurance. Now, to assist with your claim being dealt with as quickly as possible, it is important to ensure you document everything. Document your preparation leading up to the disaster and have photos of the steps you took to prevent damage e.g. sandbagging, boarding up windows, etc.
If possible, but without putting the lives of you or people around you at risk, show how the damage was caused e.g. flooding, high winds. Once the disaster has passed, take photos of all the damage including stock, fixtures and fittings and your tenancy itself e.g. paint, carpets or flooring. Even keep newspaper articles to show the impact of the event.
The distinctive red, tin roof of the famous Yatala Pies shop on the northern end of the Gold Coast. Source: The Courier Mail
Claim lost revenue
When claiming lost revenue for your business, it is important to calculate the loss of revenue during the time you were closed, after you re-open as well as the period it takes to return to normal trading conditions. This will involve leaving your claim open to ensure you capture all losses to the business until trade returns to pre-disaster conditions. Your accountant should be able to assist in making sure this is documented correctly to include in your insurance claim.
A final note
While your first call should be to your insurance broker or the insurer direct, there are always opportunities to negotiate positive outcomes with your landlord when these types of situations occur.
NRA members: If your store has been affected by the recent Cyclone or a similar event, call The Leasing Department on 1300 366 187 for a free 15-20 minute discussion about your rights under your lease and what steps you can take to make the best recovery in the shortest period of time.