Call CPL to avoid cash settlements for fire and flood restoration

When the Notre Dame Cathedral fire ravaged the building and damaged fittings, fixtures and contents, fire and flood restoration companies know what can and cannot be restored. CPL will uncover and treat secondary damage that may not be visible to the naked eye and help you liaise with insurers if you’re making a cash settlement for fire. This includes moisture locked in brick cavities, stonework and inside suspended ceilings.  CPL will detect acidic soot contamination that can undermine the fabric of a building and leave a lasting toxic odour.

Trapped moisture is a big problem that may require drilling and injection drying to remove it. When firefighters extinguish a fire they use a lot of water which means fire damage and water penetration often go hand in hand.

Comprehensive insurance is the only way to prevent business interruption and customer drift after a fire, flood, act of vandalism or another incident. Every business needs a disaster recovery plan in place naming a fire and flood restoration company. Don’t be caught out, put CPL on your disaster recovery plan today.

Benefits of cash settlements for fire

Insurers need to decide when assessing a claim whether to restore repair, replace, reinstate or settle a claim with the insured. They use a fire and flood restoration company like CPL to assist with this decision. With indemnity policies, if replacement is difficult because of wear and tear or depreciation, an insurer may offer a cash settlement instead. However, be careful because cash settlements happen quickly and can even be agreed over the telephone.

Some businesses or homeowners opt for a cash settlement when they decide they want to carry out the rebuild themselves or want to incorporate the cash into a major project, such as a total rebuild. Others choose a cash settlement for fire or flood when they are significantly under insured and have to put the money into the repairs they want to prioritise. Alternatively, an individual or business may want to sell the property without carrying out any repairs and take a reduction in the sale price.

Cash settlements are one way that insurers may transfer liability to their customers

It may be tempting to accept a cash settlement for fire but the implications are significant. The claimant quickly receives a single upfront cash lump sum and has to manage the whole fire and flood restoration process including all contractors themselves. If secondary damage is discovered later, there can be no extension or second claim.

Loss adjusters may not be involved in small cash settlements, leaving individual home owners much more exposed, particularly if remediation costs escalate. You can appeal to the financial ombudsman If you believe there are irregularities in the way your insurer dealt with your claim. CPL will help you liaise with your loss adjuster, loss assessor and insurer.

According to Morgan Clark, most of the time a cash settlement for fire or flood will not be the most beneficial outcome for a homeowner. This is due to the 20% reduction in the cash settlement value which does not include VAT on repairs.

The insurance company will also only award the equivalent cash value to the cost that they would have paid for the rebuild to be carried out by one of the builders on their insurers panel. However, builders often offer insurers and fire and flood restoration companies like CPL preferential rates which individuals can’t negotiate to provide an incentive for getting future work.

Case Study: Notre Dame Cathedral needs a fire and flood restoration company

Notre Dame Cathedral fire and Glasgow School of Art fire ravaged vast, complex structures under construction that will conceal secondary damage. Firefighters very quickly arrive at sites of national interest. However, when the Notre Dame Cathedral fire struck Paris on Monday 15 April, it took fire crew from 18:43 pm local time until 10 am the next morning to fully extinguish the blaze and embers.

France’s best and bravest firemen and women battled the flames for up to fifteen hours at the national monument until they fully subsided. This is why fire and flood restoration companies like CPL Industrial Ltd matter to restore buildings to their original condition and clean up unseen damage. Drones were used to survey the damage and Police questioned all officials on site to establish a cause of the fire which is not yet clear.

According to the Telegraph, ‘the cause of the fire has not been confirmed, but it is understood to be an accident linked to renovation works on the cathedral roof. 

French prosecutors have opened an investigation into “accidental damage,” while one official told the Daily Mail that a “stray flame” could be behind the conflagration.’ Fortunately all French renovation workers had left the building before the fire broke out. 

An article in the Independent, suggests an electrical short-circuit caused the Notre Dame Cathedral fire. It devastated more than 60 metres of the roof’s wooden frame and the spire. Investigators so far believe the fire was accidental, and are questioning both cathedral staff and workers who were carrying out renovations.

The building would have burned to the ground in a “chain-reaction collapse” had fire fighters not moved as rapidly as they did to battle the blaze racing through the building, said  France’s Culture Minister, Jose Vaz de Matos in the Independent.

Following the Notre Dame Cathedral fire, their challenge is two-fold – to understand how the fire started by examining forensic evidence and then to begin the reconstruction and complete the refurbishment. Too often accidents devastate construction sites because the hazards during construction are greater. During a complex refurbishment there will be multiple tenders and layers of liability requiring reinsurance rather than a cash settlement for fire.

Reinsurance is necessary for big insurers to prevent insolvency after a fire

In the case of the Notre Dame Cathedral fire, the insurer will need reinsurance to mitigate the risk of such a costly and specific catastrophic event. There are two main categories of reinsurance which aims to prevent the insurer becoming insolvent in the event of a big claim.

1) Treaty reinsurance agreements cover all or a portion of an insurer’s risks and they are time limited.

2) Facultative coverage insures against a specific risk factor, for example the roof catching fire or a fire that breaks out during the renovations. The underwriter would evaluate the individual risk and write a specific policy for this risk.

Both treaty and facultative reinsurance cover can be pro rata or non-proportional. If a policy is pro rata, the reinsurer will bear a portion of the losses and may receive a proportional or pro-rata share of the insurer’s premiums, for example 50% of the losses.  

Non-proportional reinsurance also called “excess of loss” reinsurance agreements are triggered when the insurer’s losses exceed an agreed amount. This is likely to happen in the case of the Notre Dame Cathedral fire because of the scale of the damage and the complexity of the structure. Residential and small business owners may opt for a cash settlement for fire or flood instead.

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