On 15th April this year, the world watched in horror as the Notre Dame Cathedral, which was built in the 13th Century, was gutted by fire. Whilst to date, there has been no confirmed evidence of arson, investigators currently believe that various scenarios could have instigated the fire, from an electrical issue, a cigarette, or was it plain negligence.
The loss of any historic building from whatever cause is devasting, and should raise important risk management questions for owners of all buildings, not just those that are considered historic. SMEs who own commercial buildings or invest in historic properties should investigate whether their own insurance policies and risk management strategies are sufficient enough to cover the costs of a massive restoration.
Whilst there are many complex factors that need to be considered when crafting a risk management strategy, a proactive stance should always be a top priority for SMEs. To this end, and bearing in mind the Notre Dame disaster, below are two actions that should be taken by all SME building owners today.
Check all electrical systems
The importance of checking the electrical wiring in all buildings, not just those that are historic or Heritage Listed is a key factor in your strategy. Of course, the older the building, the more sub-standard the wiring, and the more likely that an electrical fault could cause a fire.
Rewiring any building, let alone a large commercial building, is a very expensive undertaking. Restoration costs for the Notre Dame Cathedral have been estimated as ‘colossal’. At last count, $645 million AUD has been raised for these restorations, and even more is needed.
It’s also estimated that the restoration will be completed by 2024, in time for the Summer Olympics, but many doubt that this time frame is realistic. All of this begs the question – when were your building’s electrical systems last checked? It’s also worth considering how you would pay for restorations, repairs or a total rebuild and how your business would continue to operate until these were completed?
Obtain an up-to-date valuation
It goes without saying that every commercial building owner needs an up-to-date valuation of their building. Without a true valuation for the full replacement costs of the building, you can’t ensure that you will be adequately covered in the event of a total loss. All buildings will be expensive to replace, but historic or Heritage buildings require extensive craftmanship that can blow out a restoration budget quickly.
Another important point to consider is, that if the building’s contents also need to be inventoried and valued. Take for instance the loss of the numerous historic artefacts and works of art in the Notre Dame fire, which are now lost to us forever. Are your building contents covered properly and to the right value?
It’s not just the building that needs to be restored, but it’s the loss of our history that must be considered. Hopefully, if any good can come from the Notre Dame disaster, it’s that SMEs will take a much more proactive stance to the potential restoration costs of both their buildings and their contents.
To decide whether your building and contents are sufficiently covered for a total loss, contact an insurance specialist today.
General Advice Warning
The information provided is to be regarded as general advice. Whilst we may have collected risk information, your personal objectives, needs or financial situations were not taken into account when preparing this information. We recommend that you consider the suitability of this general advice, in respect of your objectives, financial situation and needs before acting on it. You should obtain and consider the relevant product disclosure statement before making any decision to purchase this financial product.