Flooded industrial unit: £290,000 material damage and business interruption claim

Cellular Mouldings, based in Kettering, Northants, is a specialist manufacturer of moulded products. In June 2007, a nearby brook burst its banks after torrential rain, and the factory suffered a sudden and devastating flash flood. Over two feet of water swept through the building and then disappeared almost as quickly as it arrived, leaving behind a trail of debris and sewage.

The factory was completely wrecked: as well as ruined plasterwork, doors and furniture, six out of the seven very expensive specialist moulding machines had been submerged and were beyond repair.

Managing Director David Matthews tried in vain to get a speedy response from his insurers but just could not get them to inspect the damage: “I realised that it was essential to have someone working on my behalf to get things moving, otherwise it would have been a major distraction from what I had to do to save the business.” He therefore turned to Morgan Clark to handle his claim.

The claim

Once Morgan Clark was on board, the insurer started to respond and cooperate. The priority was to keep Cellular Mouldings trading and to restore production as quickly as possible. Morgan Clark immediately submitted an interim claim to maintain cash flow. Then, working with Morgan Clark, Mr Matthews located temporary machines and sub-contracted some of the work, while production staff worked overtime to fulfil orders.

Morgan Clark then compiled and presented comprehensive buildings, tenant’s fixtures and fittings, contents and business interruption claims.

The results

Morgan Clark successfully negotiated a claim for £220,000 for material damage. More importantly, it successfully negotiated a business interruption claim of £90,000 for loss of turnover based on the growth the company would have achieved if the flood had not happened, rather than on the previous year’s performance.

By leaving the insurance negotiations to Morgan Clark, Mr Matthews was able to focus on re-establishing his business. Existing customers’ orders were fulfilled through careful distributed production and sub-contracting. At the same time new machines were located quickly and started to be installed a month after the disaster. As a result, Cellular Mouldings survived and has gone from strength to strength.