On Friday, February 10th an “A” class office tower in Burlington, Ontario built in 1993 and consisting of 134,894 sq. ft. was damaged during a massive fire that took several hours to extinguish. The fire that reportedly started on the roof resulted in the evacuation of several hundred people working in the six-storey mixed tenant building. According to the Burlington Fire Department, the fire caused between $2 million and $3 million damage to the building alone.
This was not the type of loss that would be expected at a building of this type. Water damage or a small kitchen fire is what could have been expected but not a significant rooftop fire such as this.
So how will the Business Continuity Plans of the impacted tenants hold up under the pressure of the loss? The leaders of impacted businesses were likely relieved that the fire occurred on a Friday as it gave them an extra couple of days to figure out how best to keep their businesses running. Some will have felt confident as they had well established plans that were thoroughly tested while others would have found themselves dusting off a plan that had been consistently deprioritized and scrambling to the opening of the business week.
An inability to quickly re-establish business operations after a significant loss can have dire impact on a business and can ultimately result in the failure of a business to resume operations following a loss. Couple a weak business continuity plan with inadequate business interruption limits and the business is at the very least in for a rough run.
A well designed business continuity plan is a natural part of the ERM of an organization and should be discussed with insureds as part of their annual property renewal. Being confident that your Client has a well designed and tested plan means you can also be confident that they understand the duration that they will potentially be down, what they can do to re-establish even a portion of their business and what the extra cost is likely to be to keep the business operational.
Brokers should offer clients a robust Commercial Package Policy including property and business interruption. Ask us about how we can help by providing coverage in a seamless fashion from one policy to the next.