In August 2024, a café and catering business faced significant challenges after a storm forced its closure.
The establishment remained shut until January 2025, during which time the insurer, Suncorp, accepted the claim and completed necessary repairs.
The insurer compensated the business with $280,570 for a year's gross profit loss and an additional $26,863 for increased operational costs.
However, a dispute arose when the café contested the insurer's application of an underinsurance clause, which led to deductions in the payout. The business argued that the adjusted value at risk exceeded 80%, suggesting that the underinsurance clause should not apply. Conversely, Suncorp maintained that the sum insured was less than 80% of the actual risk, justifying the proportional reduction.
This case underscores the critical importance of ensuring that insurance coverage accurately reflects the true value of a business's assets and potential risks. Underinsurance can lead to significant financial shortfalls during claims, leaving businesses vulnerable during recovery periods.
For Australian restaurant and café owners, this incident serves as a cautionary tale. Regularly reviewing and updating insurance policies to align with current asset values and operational risks is essential. Engaging with insurance professionals to assess coverage adequacy can prevent potential disputes and ensure smoother claim processes in the event of unforeseen incidents.
Published:Friday, 20th Mar 2026 Source: Paige Estritori
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Knowledgebase
Public Liability Insurance: A very broad term for insurance covering liability exposures for individuals and business owners. It provides broad coverage, generally including all exposures for property damage and bodily injury.
