London City fire highlights importance of business insurance

Three businesses were closed down in the City of London yesterday as fire rampaged through a five storey building. Many more were affected by the fall-out as fire fighters cordoned off the surrounding streets preventing many workers from getting to their offices.

Sosho, a popular city nightclub; The East Rooms, a private members bar and restaurant; and The Prophet pub and restaurant were all severely damaged in the fire which is likely to have caused millions of pounds in damage.

It was fortunate that no-one was hurt as the fire occurred after all the venues had closed for the night, however the incident shows in graphic detail why it is important to have the proper levels of business insurance cover.

Here, Simply Business explains the types of cover which those businesses would ideally have to protect them in this situation.

Buildings insurance cover

The fire started in one building but as it was a terrace, it inevitably spread.  Someone has to pay for the cost of rebuilding, or at least to have the building made safe while its fate is determined. Buildings insurance like office insurance should cover this cost for the businesses involved.

Contents of the buildings

Restaurants and bars often need a combination of insurance covers to protect the various types of contents they have. Business contents insurance for office equipment, fixtures and fittings cover for the interior and stock cover for the beer, wine and food destroyed in the fire.

Surrounding shops may also need to claim on their insurance, for example retailers who will have been affected by the thick smoke that permeated the buildings in the surrounding streets. Marks and Spencer, Gap and many more fashion stores may have stock that smells of smoke which they cannot sell.

Business interruption cover

None of the businesses damaged by the fire will be able to operate for the foreseeable future. If they have a level of business interruption cover they will at least have a some income while they are out of action. Other businesses affected by the fire – for example office based businesses evacuated while the building is made safe – could also benefit from this cover.

Public liability insurance

Luckily no-body was hurt as a result of the blaze but it could easily have been different. The club could have been full of customers, or if the fire had spread to nearby residences other people could have been hurt. There are also issues with the safety of the building – if a wall collapsed, for example, it could hurt passers by.

However, public liability insurance may come into play if any of the nearby residences have had their property damaged because of the fire.  Even if the fire itself has not caused damage, the water from the fire services attempts to prevent the fire spreading will surely have caused some damage.

A Simply Business spokesperson said: “This fire has devastated several businesses which our staff regularly visit and our sympathies go out to the business owners and employees. In general, people are understandably not overly enthusiastic about paying for insurance but it’s at times like this that we are all reminded of how important business insurance actually is.”