Seafood Distributor Prevails in Insurance Claim for Stock Losses Due to Power Outage

The incident occurred when severe storms and flooding led to a power shutdown in the affected area. The seafood distributor was left without refrigeration for seven days, resulting in significant stock spoilage. The insurer, QBE, initially denied the claim, citing a flood exclusion clause in the policy.

However, AFCA's investigation revealed that the primary reason for the power outage was safety concerns, not direct flood damage. The energy supplier had proactively turned off electricity to prevent potential hazards, a decision made independently of the flooding. This distinction was crucial in AFCA's determination.

AFCA concluded that the power cut was not directly caused by the flood but was a precautionary measure. Therefore, the flood exclusion did not apply in this context. The ruling emphasised that insurers must carefully assess the root causes of incidents and not solely rely on policy exclusions without thorough investigation.

This case highlights several key considerations for business owners in the hospitality sector:

• Policy Understanding: It's imperative to thoroughly understand the terms and exclusions of your insurance policy. Knowing what is covered and what isn't can significantly impact the outcome of a claim.
• Documentation: In the event of an incident, maintain detailed records of all communications, decisions made by authorities, and the sequence of events. This documentation can be invaluable during the claims process.
• Proactive Communication: Engage with your insurer promptly and provide all necessary information to support your claim. Transparency and promptness can facilitate a smoother claims process.

For restaurant and café owners, this ruling serves as a reminder of the importance of having comprehensive insurance coverage that accounts for various contingencies, including power outages. Regularly reviewing and updating your policy to reflect current risks and operational changes is essential to ensure adequate protection.