The Belmont Client Incident
During the busy Christmas period, our client, a local bus operator, suffered a fire at its London depot resulting in the total loss of 16 buses in the incident.
The Belmont Protection Approach
A motor insurance policy, even when providing cover for "Comprehensive" risks, is structured in the main for accidents occurring on the public highway - i.e. for road traffic accidents.
It will not provide adequate cover to an operator for a multi-vehicle loss occurring at the operator’s own premises, which is what happened in the above incident.
Such cover on its own will fall short of what is needed in the following crucial areas:-
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A "Comprehensive" Risks motor policy contains a vehicle damage excess on a per vehicle basis, irrespective of how many vehicles are lost or damaged.
- Settlement under a motor policy for "written off" vehicles will always be on a market valuation basis.
- No cover will exist for consequential loss including, for example, the cost of hiring alternative vehicles.
The Belmont Cover Solution
In respect of the accumulation risk for motor vehicles "off road and back at base", we always structure our clients’ insurance programmes to ensure that the Property and Business Interruption policies contain the following essential cover features:-
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Any policy excess to apply once only in the respect of the total incident and not on a per vehicle basis.
- Claims for vehicles "written off" to be settled on a replacement as new basis, without deductions for use, wear and tear.
- Cover to include consequential loss relating to income reductions and/or additional working costs, including provision for the hire of temporary replacement vehicles.
Results of our Client’s Insurance Claim
Because our client’s insurance programme at the time of the loss was arranged as shown above, the following courses of action were successfully implemented:-
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The client had the freedom to buy replacement vehicles, either new or second hand.
- As a result of this, the replacement time for the destroyed vehicles was kept to a minimum.
- The client was able to hire alternative vehicles whilst permanent replacements were being sourced.
- The client did not incur any loss of income and was able to operate as normal during the vehicle replacement process.
A properly structured insurance programme offers complete peace of mind and flexibility to the operator and, quite clearly, a motor policy on its own does not provide the right answers for a loss incident of this type. It goes without saying that if, for example, an operator is unable to maintain uninterrupted service to its bus routes, then the business and its reputation could be irreparably harmed.