Up to their necks in it
- Marguerite McKinnon
- 23 October 2008
David Earl’s Newcastle Embroidery shop had been turning a profit for seven years. On 8 June 2007, the luck ran out.
“I got the call from one of the store owners across the street who heard a loud bang,” he explains. “He went to the window and saw my front windows had blown out and water was carrying all my stock out the window and down the street.”
The bill was horrendous: $300,000 in plant equipment, $70,000 in lost stock, $200,000 damage to the building and another $300,000 in lost business in the months that followed.
“Luckily my insurance company classed the event as a storm rather than a flood and paid my full entitlement as I didn’t have flood cover,” he says. “They also classed it as a total loss so in 10 days I had $50,000 to pay bills, my seven staff and get my business together.”
However, Earl had fallen into the same trap as many small businesses. “Because I didn’t read the policy properly I missed out on $100,000 electronic breakdown insurance.”
One night’s storm damage took nine months to recover. Because of indecision about the future of the damaged building, Earl had to relocate. The damage has put the business nearly two years behind.
“It will take us another six months before we’ll be trading at a reasonable profit,” he laments.
Around 5.30pm the same day, Brad Jones was preparing for a full Friday night at his restaurant Destinys on Nelson when water started pouring in. The coffee machine sparked, the air conditioner blew and staff made a flurry of calls telling customers not to turn up.
Jones has since posted video of the storm damage on his website
. He is still
fighting for his insurance payout. His website has become a shrine dedicated to fighting his insurer’s attempts to avoid more than $200,000 in compensation.
“I’ve lost $215,000 in the dispute and that’s just contents and items we need to replace so we can get back to full capacity,” he says.
While other insurance companies agreed the damage was caused by a storm, Jones’s insurer classified it as a flood. It’s now being fought through the courts.
“The company appears to be too busy worrying about how they can save money instead of getting us back on our feet,” says Jones.
Wallsend Town Committee member Kathie Heyman says out of 30 businesses that were flooded that night, six have closed permanently.
“We’re still waiting for council to finalise draft plans to allow a $50 million state government-funded flood plan,” she says.
While politicians get caught up in red tape, some words of advice from those who learned the hard way.
“Read the fine print,” says Earl. “Be sure you have the correct insurance. Make your broker explain the policies in absolute detail and do ‘what happens if’ scenarios so there are no terrible surprises.”
“Stick with an Australian insurer,” laughs Jones. “We’re now with [a local firm] and the difference is amazing. Our new broker sat down with us to explain everything.
“I have no idea if we’ll see the money owed to us, but we will re-open back to 100% instead of the 50% we have now.”
