Posted: Thu, 22 Feb 2018 14:40


Business Interruption: Is Your Business Covered

Business interruption insurance is, arguably, the most important insurance cover for any business.

If a fire causes your business facility to be unusable, even temporarily, what would you do next? It could take months before the damaged property is rebuilt and stock, machinery and equipment are repaired or replaced. Would your business be able to pay utilities, wages or any other standing charges without any income?

Traditional property insurance does not cover the costs associated with temporary moves or loss of income when a business must close on an interim basis. Without cover, many businesses may be forced to close down permanently.

Business interruption insurance cannot be purchased on its own, it must be added to an existing policy such as property or office insurance.

A business interruption policy can provide:

  • Compensation for lost income if the business has to vacate its premises as a result of disaster related damage covered under a Property Insurance policy
  • Compensation for the gross profits that would have been earned based on previous financial records, had the major loss/peril not occurred
  • Cover for operating expenses that must be paid even though business is temporarily suspended
  • Cover for the increased cost of working, including expenses of operating in a temporary location while repairs to the permanent location are completed.

Businesses must determine what maximum indemnity period is sufficient to cover the amount of time it will take for them to recover following a major loss. This includes considering the worst damage or disaster that could occur and estimating how long it will take to repair the damage. It is also important to consider how long it will take to recover customers and market share. Typical maximum indemnity periods range from 12 months to 36 months.

We can help you identify these major risks and indemnity periods, as well as making sure that your insurance cover is adequate for your needs.

For more information contact 01509 622220.

Tags: Business, Commercial