With Monday’s dramatic armed siege of a Sydney cafe causing the evacuation of thousands of workers, business interruption (BI) policies are likely to be vital for some businesses to recover losses.
Three people, including an armed gunman, were killed on Tuesday morning as police moved to end a 16-hour long siege of the Lindt Chocolat Cafe in the CBD’s busy Martin Place.
Hundreds of businesses were affected, with thousands of workers evacuated as businesses shut down for the day, including many major financial institutions.
However, LMI Group Founder Professor Allan Manning says it is unlikely that the Australian government will declare the siege an act of terrorism.
“It was a single man acting alone and, like the Cronulla riots, I would suspect the private insurance industry would be looked to respond to the needs for the losses suffered by their insureds,” he says.
A possible concern for affected businesses, however, might be the fact BI policies, even when covering closure by public authority, can contain time excesses of up to 72 hours.
“I understand that some insurers are considering waiving (these) in this particular case to assist their customers during this critical period,” he says.
“While this has to be handled carefully so as not to set a precedent for future losses, it is certainly an act of great goodwill by those insurers to their customers.”
Manning says some clients could also be covered by murder-suicide extensions to their industrial special risks or business pack policies, which sometimes extends to events near the insured’s premises.
“Where this coverage is provided it typically does not have a time excess, although there may be a policy sub-limit,” he says.