The recent wave of unrest that has blazed in KwaZulu-Natal and Gauteng has left a trail of destruction that will impact our economy for years to come. eThekwini Mayor, Mxolisi Kaunda, says that more than 40 000 businesses in the region have been affected and estimates that the damage to property and equipment will exceed R15 billion.
With most companies already in the process of rebuilding, Craig Mendelson, the Short-term Insurance Manager for Consolidated Group says there is some good news for business owners. The South African Special Risks Insurance Association (Sasria) has been proactive in its dealings with insurance companies to ensure that claims will be expedited.
“The state-owned entity, Sasria, is the only insurer in South Africa that provides cover for loss or damage to insured property as a direct result of social unrest, including rioting, strike action and public disorder,” Craig explains.
“Businesses that have Sasria cover and have claims up to R50 000 should be paid out quickly as the Association has given certain insurance companies a mandate to settle these smaller claims directly. All larger claims will however have to go through the usual Sasria approval process; but the Association has promised that even these will be expedited.”
Craig expects that businesses with smaller claims will be paid out within a few weeks whereas larger claims may take up to two months or longer, depending on the complexity of the claim.
Sasria does not deal directly with the public but its cover is included as an option in most commercial and consumer insurance policies. If this is selected, the insurance company is responsible for administering the cover.
“Insurance companies offer insurance for unforeseen incidents including accidental damages, theft (not arising from riots) and weather-related damages. In practice, business owners take up this normal insurance, but supplement it with cover from Sasria,” says Craig.
“It’s a simple box ticking exercise when business owners select their cover and while many companies choose to include it, there are exceptions and unfortunately, there is no recourse now for these businesses as their regular insurance won’t pay out for damages caused by social unrest.”
Sasria cover comprises a number of categories including material damage to domestic and commercial property, goods in transit, motor and business interruption. Craig says this latter cover could be a saving grace for many businesses, but cautions them to check their limitations.
“Saria Business Interruption insurance covers consequential or indirect financial losses suffered as a result of looting, property damages such as fire or vandalism during riots, strikes and public disorder amongst others. Usually a time period is specified for this cover which varies from three to 24 months,” says Craig.
Knowing the period over which the the business interruption cover will pay out may help companies with their expenses in the short-term while they are unable to trade but it could leave them exposed in the long-run, depending on how long they need to rebuild and become fully operational.
Sasria limitations also apply to the value of the business insured. If a business owner is insured by Sasria to the tune of R100 million and incurred damages or losses worth R500 million, Sasria will only pay out the insured amount. The owner will have to pay out of pocket to fix the uninsured damages.
To understand all these exclusions and limitations, Craig advises any business owner who is submitting a claim due to the recent riots to work directly with their broker.
“Your broker will help you to fast-track your claim and will handle the administration with Sasria for you. The most important part of this is to ensure that all the correct documentation is submitted from the start and if you get this right, it will assist in your claim been resolved speedily.