BUSINESS INTERRUPTION INSURANCE
What is Business Interruption insurance?
Business interruption insurance is designed to protect your business in the event of an unintended interruption, so that it can be put back, as near as money will allow, in the same position at it would have been had the unintended interruption not occurred. It is not dissimilar in some ways to personal income protection, but for your business and considered by many insurance professionals to be the most important of all insurance covers.
Who needs Business Interruption insurance?
If your business is reliant upon its revenue to meet its fixed overhead expenses, you need Business Interruption insurance. It’s that simple.
What does Business Interruption insurance cover?
Business Interruption insurance allows you to insure your business’ Insurable Gross Profit, which is not same as its accounting gross profit, for a period of time, which we refer to as an indemnity period and is usually 24 months. Should your business then suffer a reduction in income as a result of an insured event, which is often the case, your Business Interruption insurance will seek to cover the shortfall, allowing you to continue to pay your fixed overhead expenses.
Common examples which give rise to a Business Insurance claim are:
- Fire or any other catastrophic event occurring at your business premises
- Damage occurring to a public service provider or even a supplier, which has a negative impact on your business
In the event of claim, in addition to the reduction in income, Business Interruption insurance can allow provide cover for:
- Professional fees associated with claims preparation costs
- Rewriting of any lost records
- Increased cost of working
- Additional increased cost of working
How much Business Interruption insurance is enough?
Of all the different insurances available, Business Interruption insurance is perhaps the most important one to make sure the sum insured is correct.
This is because unlike other insurance policies, most Business Interruption insurance policies are subject to extremely strict co-insurance clauses, which require you to insure 100% of your Insurable Gross Profit, not your accounting gross profit! In the event of a claim, should the loss adjuster deem the sum insured to be less than your Insurable Gross Profit at the time of claim, the insurance company will seek to reduce your benefit.
It is for this reason that we strongly recommend you seek our services when considering Business Interruption insurance, as we have the knowledge and expertise required to work with your CFO to correctly calculate your Insurable Gross Profit, thus ensuring your business is adequately protected in the event of a loss.
To find out more about Business Interruption insurance, or a review of your current sums insured, please contact us via the form below.