Severe flood warnings back home in West Yorkshire prompted Webster to lift IT kit from the floor to table tops. It would probably all blow over, reckoned Martin, before logging on to his iPad next day and looking at CCTV footage of his envelope overprinting company.
At first the managing director of AD3 saw only darkness on his mini screen, and then he did a double-take. Floating across a floor was a sheet of white paper. Within 20 minutes one metre of water was lapping against walls, doors, all that IT, and ten envelope overprinting machines worth about £1.3m. What he needed now was not just a stiff drink. Martin needed damn good insurance.
The challenge
Two days before New Year’s Day 2016, the loss adjusters visited the the 9,300m² Leeds site to survey the damage caused by Storm Eva. In its 17 years of business AD3 has served print brokers and commercial printers with standard and gusset envelopes and built up an array of machines totalling seven litho envelope overprinters and three digital printers.
All of them were written off when the River Aire burst its banks, taking with it a forklift truck and van. Before he booked an early flight back home, a worried Martin phoned his insurance broker to check he was covered - his company had already taken four telephone calls in succession from customers on the state of the business.
“My broker called me back within 20 minutes to say he’d been through the policy and we were covered: the relief was unbelievable,” he recalls. “The irony is that when the insurers first visited our site a few years ago they said there was no way we could flood, as there was a 20ft drop to the river at the back of our unit.”
They were right, almost. The River Aire burst its bank a few miles upstream, but the water drained along nearby roads before working its way back into the river – through his business unit. What first hit Martin inside the building was the stench. Then the sludge. Then the devastation, not just every printing machine, but office kit, thousands of envelopes and orders ready for despatch.
Even before the insurance wheels began to grind, Martin trudged down the road to buy a £20 telephone – all AD3’s had been wiped out – to test the phoneline was still functioning. It was, so he bought three more phones and a couple of Epson desktop printers to process orders. For despite the stench and mess he was resolved to keep the business going immediately after the Christmas break.
The method
His focus turned to insurance. AD3 had taken out a fully comprehensive policy including loss of earnings, interruption of business and a ‘new for old’ clause, meaning each machine was insured up to the value it would cost to replace new. Fully comp was a must, he says, given some of those Halm and W&D machines cost anything from £120,000 to £250,000.
“I’m so glad we chose a broker; insurance is extremely important but complicated. And when you are busy you have to rely on other experts. He worked out the best insurance deal and gave us advice that would turn out to be vital.”
It included a useful pointer on those loss adjusters. Fortunately for Martin and his dozen staff the broker had advised them to use loss adjusters independent from insurers involved in the claim.
“One of the key, and best, things he suggested was to use an outside firm to work on our behalf for a claim so big, around £1m. Insurance firms can try and minimise payments and you need people on your side to ensure they pay everything under the policy. The loss adjusters charged 3.5% of the final figure paid, so it’s in their interest to maximise the claim.”
The experts did their stuff, claiming for items Martin “would never have thought” such as stocks of paper and racking destroyed by the water. Loss-of-earnings coverage meanwhile was critical for a company that wanted to press into action even before the mess had been cleared.
“It enabled us to set up a brokering operation and farm out all our existing work and new orders. It costs more money to do it that way, but our policy ensured we were compensated for that extra cost. If you want to start as soon as possible after such a devastating blow, you need an all-singing, all-dancing insurance policy.”
The result
Still, Martin and his team needed money fast. Within the first week of the floods, his insurance company awarded AD3 a “six-figure sum to tide us over”. There could be no doubt, he says, AD3 had a bona fide claim, so that first payment ran smoothly. And then his team spent the next three and a half months “tossing about numbers and wrangling over the final figure”.
Martin’s biggest worry was staff: “I was concerned I might start losing my people because of delays in paying wages: the devastation – the smell and damp – was still around and they had mortgages and holidays booked. If I was in their position would I be looking for another job? If so, and I lost three key staff I don’t think I could have recovered in the same way.”
Fortunately the interim payment solved immediate cashflow problems, while other local printers and suppliers rallied around. One of them, a nearby paper manufacturer, had three unused Halmjets, but no staff to operate them. AD3 agreed to print for free for the manufacturer in return for being able to print its own work.
Martin is surprised how smoothly he managed to reboot the business and ensure orders ran to schedule. He lost virtually no customers, and his only concern was ensuring quality control on all the farmed-out work. Bar a few quibbles, he and his clients were satisfied.
By this time the “wrangling” over the final figure was in full swing and took three-and-a-half months to reach a conclusion. The final settlement was around £1m and went into the company account within three days in March 2016. Rather than buying new kit, Martin’s team bought exactly the same model makes but refurbished and in better condition. After four months of silence, to hear the equipment running again was a huge boost to morale and confidence he says.
And the money saved by buying refurbished kit instead of new helped solve the one outstanding, and monster, problem facing post-flood AD3: where was home?
AD3 moved into a new, bigger, base four miles away just over three months ago and that extra space has enabled it to bring graphics and platemaking in-house. Martin’s only regret over insurance was how much he valued his office equipment: £10,000. It cost double that to replace.
“It was clear very early on we would never again get flood insurance on the old property but the savings we made on buying refurbished kit freed up enough to buy an industrial unit outright four miles away. There is no rent and, being on the side of hill, no threat of flooding.
“From the brink of total devastation AD3 has gradually been able to rebuild itself. Our journey could serve as a warning to printers looking to trim costs in these days of reduced margins. Trying to save money through reduced insurance cover may not always be the answer.”
VITAL STATISTICS
AD3
Location Rothwell, Leeds, West Yorkshire
Inspection host Managing director Andy Martin
Size Turnover: £1.5m; staff: 12
Established 2000
Products Overprinting services, supplying commercial clients such as print managers and commercial printers with standard and gusset envelopes printed in up to four colours.
Kit One four-colour Halm EM4000 envelope printing press, four two-colour Halms, one four-colour W&D, one two-colour W&D machine, two Memjet digital inkjet machines and an Illumina digital laser machine
Inspection focus Making a successful insurance claim
TOP TIPS
Think about using a broker, as they are not tied to an insurer but will act on your behalf by scanning the whole market to suit your needs.
Consider using an independent loss adjuster, who will work for you, not the insurer, and will manage your insurance claim from start to finish.
Don’t undervalue your office equipment, says Martin: “We got caught short with office equipment; it’s easy to let slip how much gear you accumulate and what it’s worth.”
Keep reviewing your policy. “Some people never look at their policy until it is out of date in terms of equipment purchases and other company changes”, he says,
Be prepared to negotiate, as insurance firms can try and minimise payments and don’t want to pay you more than they have to.
