The event
A hardware store closes at 5:30 pm on a Friday. Staff lock up, the alarm is set and the team heads home for the weekend.
Later that night, a fire starts inside the premises. Emergency services attend, but by the time the fire is brought under control, the business is facing a significant loss.
The damage
The fire causes damage to key operating equipment, stock, shelving, display areas and parts of the building. Smoke has also spread through the store, affecting items well beyond the immediate fire zone.
Before the business can reopen, electrical systems need to be inspected, damaged stock needs to be assessed and the premises need to be made safe. What first appears to be a property damage issue quickly becomes a broader business continuity problem.
The interruption
The store cannot trade.
Weekend sales are lost, existing orders are delayed and regular customers who need urgent supplies may begin sourcing products elsewhere.
Staff need direction, suppliers need updates and the business owner is suddenly managing emergency services, assessors, builders, electricians, stock records, payroll and customer communication.
Even once repairs begin, the recovery period can be longer than expected. Stock needs to be replaced, essential services may need to be restored and customer confidence may take time to rebuild.
Reopening the doors does not always mean sales immediately return to normal.
The insurance response
Property insurance may respond to the physical damage to insured assets, such as stock, contents, fixtures and the building, if they are insured by the business.
Business interruption insurance is designed to support the loss of income and certain ongoing expenses while the business is impacted by an insured event.
For a hardware store, this can be critical because the financial impact of being unable to trade can sometimes outweigh the immediate physical damage.
Questions this raises
This type of event highlights the importance of reviewing whether your insurance program reflects the way your business actually operates.
- Is your stock sum insured accurate?
- Does your policy allow for peak stock periods?
- Do you have business interruption cover?
- Is the indemnity period long enough for a serious fire or major property loss?
A major loss can happen outside business hours, but the impact on the business can begin immediately.
Is your cover still right for your business?
For NTHA members, now is a good time to review whether your insurance program still reflects how your business operates today.
That means checking sums insured, stock levels, business interruption cover, imported products, liability exposures and the time it would realistically take to recover from a serious loss.
While improved market conditions can help, strong insurance outcomes also depend on businesses being able to clearly demonstrate how risks are managed.
If you’re unsure whether your current cover is still right for your business, facing a difficult renewal, working through a claim or have changed the way you operate, Sage Insurance is here to help.
As NTHA’s insurance partner, Sage understands the timber and hardware industry and can provide practical advice to help members review their cover and make informed decisions.
NTHA members can contact Sage Insurance on 03 9969 2067 or hello@sageins.com.au, or visit sageins.com.au to discuss their insurance needs.