The recent fire in the Liverpool car park not only caused extensive damage to the vehicles parked there and the fabric of the car park building, but also had a detrimental effect on nearby businesses that did not actually suffer any physical damage to their property.
A standard All Risks Property Damage insurance will not respond to business losses arising in situations where there has been no physical damage to the property. Instead such losses may fall under certain cover extensions provided under the Business Interruption insurance, the most familiar of which is the standard denial of access extension which compensates for loss caused by restriction or prevention of access to or use of the premises, due to damage to property in the immediate vicinity of the business premises.
In the case of the Liverpool car park fire, because this was such a serious fire the emergency services closed off the surrounding area, meaning that the public could not gain access to local businesses such as shops, restaurants etc. resulting in a loss of income for these businesses. Such closure not only impacts upon a customers' ability to get there but also the ability of suppliers to deliver goods which may in turn effect the business.
A less well known cover extension is Loss of Attraction cover, which is where there may be no damage to a business but damage to other local amenities which could mean customers are put off from visiting an area, reducing passing and regular trade.
This is particularly relevant to the Liverpool car park fire because not only did the fire occur on New Years Eve when many people are attracted to spend the night celebrating in the bars and restaurants in the area surrounding the car park, but also because the Liverpool International Horse Show was being held in the nearby Echo Arena and the car park itself is used as the Arena car park. Because the fire, which was very well publicised, started in the late afternoon and was still burning some 10 hours later, many people were undoubtedly put off from attending these attractions in the area.
There is also continued loss of attraction to be considered as it is likely to be some time before the car park is repaired and available for use. If there are no other car parking facilities in the area, local businesses will continue to suffer a loss of trade.
It must be stressed that not all insurances provide these Business Interruption extensions and where they do, there can be restrictions on the distance of the property from the location of the incident or monetary limits imposed. Nevertheless it is important that businesses relying on the attendance of the public such as shops, restaurants, takeaways and hotels consider their location, what effect something like a nearby serious fire could have on their trade and income and if their insurance arrangements provide relevant and adequate cover.
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