Royal Hotel – Roma South West Queensland

The Royal Hotel in the centre of Roma was a grand old building constructed in the 1920’s a typical old brick and timber country Queensland pub with accommodation on the upper level.

The current owners purchased the business in mid-2013 and under their management, it became a popular spot for a drink or meal. The seafood served there was particularly well regarded by locals!

The building was owned by one party and another owned the contents and operated the hotel. Both were named on the policy of insurance and have a close business relationship.

In the late afternoon of Saturday 15 November 2014 fire spread throughout the hotel destroying the building and its contents; it was still smouldering some two days later.

The broker, immediately advised the insurer and recommended to their client that LMI be engaged to assist in preparation of the claim.

The fire believed to have started in the kitchen area was accidental and the insurer quickly accepted the claim ‘in-principal’.

The remains of building and contents were removed within a few days. Asbestos was found in the debris and this greatly increased the cost to remove the debris as there was the possibility that asbestos fibres had contaminated the whole site. The sub limit for removal of debris would have been sufficient had it not been for the asbestos contamination as this required specialist removal, air monitoring and high Council tip fees.

It rapidly became evident that the time needed to rebuild the hotel would be much greater than the 12 month business interruption indemnity period covered under the policy so with LMI’s assistance, the client started to consider the purchase of another hotel rather than rebuilding.

The loss adjuster supported this idea and assisted by providing consultants to determine the replacement value of building and contents. LMI and adjusters independently assessed the business interruption claim providing the broker and insurer with a range of settlement figures which they were able to use when negotiating settlement.

While this was happening, the owners were looking for an alternative hotel to purchase as a going concern. As the policy did not restrict them to the site of the old hotel, they considered several throughout northern NSW and south east Queensland. At the time of writing this, they have put in an offer on a hotel in a Brisbane suburb.

Insurers agreed to settle on what it would have cost to rebuild plus the associated business interruption, providing the client can prove that they are purchasing another hotel in lieu of rebuilding. Without this proof, the claim would of course revert to indemnity conditions and the business interruption claim would be in doubt.

This has been a great result and shows that with good will from all parties, good commercial sense and cooperation, claims can be expedited in a manner that is mutually acceptable to all.