In October 2022, authorities closed the primary road to Falls Creek due to safety concerns following a landslide and anticipated heavy rainfall. The café, heavily reliant on tourist traffic, faced a substantial decline in gross profits as a result of the road closure.
The insurer, QBE, initially denied the claim, arguing that the policy's prevention of access clauses did not apply and citing an exclusion for landslides. However, the Australian Financial Complaints Authority (AFCA) found that the Department of Transport's order to close the road constituted a valid trigger under the policy's prevention of access clause.
AFCA determined that the road closure directly prevented access to the café, thereby activating the business interruption coverage. Additionally, the authority concluded that the landslide occurred within 72 hours of heavy rainfall, meeting the policy's criteria for coverage despite the landslide exclusion.
This ruling underscores several critical points for hospitality business owners:
- Policy Clauses: Familiarise yourself with specific clauses in your insurance policy, such as prevention of access and exclusions related to natural disasters. Understanding these can be pivotal in claim situations.
- Timely Reporting: Report incidents promptly to your insurer and provide comprehensive evidence to support your claim, including official orders and documentation of the event's impact on your business.
- Risk Assessment: Regularly assess potential risks associated with your location, such as susceptibility to natural disasters, and ensure your insurance coverage adequately addresses these risks.
For restaurant and café owners, this case highlights the necessity of having a robust insurance policy that accounts for various scenarios, including natural disasters that may indirectly affect business operations. Regular policy reviews and consultations with insurance professionals can help ensure that your coverage remains aligned with your business's evolving needs.
