In this case involving a busy hospitality venue owner with 5 businesses along Brisbane's nightlife hotspot of Brunswick Mall, lack of close attention to insurance arrangements nearly resulted in a considerable loss. Fortunately the owner switched brokers to Gallagher and our claims advocate was able to overturn the original payout offer.

It happened on Halloween 2020: a welding torch accidentally left turned on in an adjacent property caused the Fortitude Valley pub to catch fire — a conflagration that required 50 firefighters to bring the blaze under control. At $2.5 million the damage from both fire and water to the former bank building was extensive, and the lost business estimate was in excess of $1 million.

Threat of underinsurance almost halved calculated payout

When Gallagher took over the venue owner's insurance broking 5 months after the fire there had been no action on the client's behalf, no claim payout and no rectification plan for restoring the property.

The Gallagher team acted immediately to establish a plan detailing the material costs of restoration and once repairs were carried out the pub reopened 1 year and 3 weeks after the fire.

A claims preparation process was also set in motion to obtain financial information about the impact of the business interruption loss on the business, a figure of $1.2 million. The team also discovered a potential underinsurance component when comparing the declared value of turnover versus the actual turnover.

Why it's always important to update and check on sums insured

Initially it looked as though the owner didn't have sufficient business interruption cover and would be entitled to only 40% of the business interruption loss, $500,000.

However, the Gallagher team scrutinised the wording in the policy and argued that co-insurance where an underinsured business absorbs the difference between a percentage of the payout and the total loss ‒ couldn't be imposed in this instance. The business owner engaged a lawyer who used this information to negotiate an additional $600,000 improvement on the initial offer and the BI payout was settled at $1.1 million.

Talk to an expert

Getting the terms of your property and business interruption insurance right and making sure the sums are accurate is crucial to receiving the protection you're seeking, but it is a complex process and having someone outside of your business helping make these assessments can help ensure you don't overlook something vital.

An insurance broker who knows your industry and business can provide invaluable guidance and advice to help you get your sums insured right because they understand exactly the information required.


Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general information purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient's industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers' control.

Gallagher publications may contain links to non-Gallagher websites that are created and controlled by other organisations. We claim no responsibility for the content of any linked website, or any link contained therein. The inclusion of any link does not imply endorsement by Gallagher, as we have no responsibility for information referenced in material owned and controlled by other parties. Gallagher strongly encourages you to review any separate terms of use and privacy policies governing use of these third party websites and resources.

Insurance brokerage and related services to be provided by Arthur J. Gallagher & Co (Aus) Limited (ABN 34 005 543 920). Australian Financial Services License (AFSL) No. 238312