Insurance may cover any losses by retailers during Occupy Central
Some retailers and hotel groups will be covered by insurance against potential business losses should large protests stall business in Central.
Companies have bought business interruption insurance policies that covers them if fire, water damage or riots mean the cannot open or conduct business. Some factories also carry similar coverage.
The policies were purchased with property damage insurance, said Allan Yu Kin-nam, a member of the Hong Kong Federation of Insurers' governing committee. He said such policies could cover losses incurred by the occupation of Central by Occupy Central protesters.
"If Occupy Central ends up being very peaceful, then it would not trigger the compensation of the business interruption insurance. However, if the event results in a sort of riot, such as some people smashing the windows of retail shops and the companies could not be open for business, then the companies could file claims with the insurance companies," Yu said.
Insurance sector legislator Chan Kin-por said companies may be able to claim replacement costs for any damage caused by protests and perhaps sales losses. Coverage might also pay for the potential loss of business because the protests prevented staff from getting to work.
Chan said the companies would compare the turnover - or gross sales revenues - of the period affected by the event with the turnover a year earlier or a period that the company proved represented their normal business volume. The insurance companies would then pay the difference as compensation.
The highest amount of business interruption insurance paid out in Hong Kong happened during the outbreak of severe acute respiratory syndrome (Sars) in 2003. Many hotels and retailers could not open, and tourists fled. Some insurers said the total payout was more than HK$100 million.
Some retailers said they had prepared for possible business disruptions in Central.
A Chow Tai Fook spokeswoman said its shops in Central may close if the area was impacted. "We will be on our guard to ensure the safety of our customers and staff, and to avoid damage and losses to the shops in the face of potential radical situations," she said.
A spokeswoman for fashion retailer Coach said the company had contingency plans to manage various scenarios at its stores.