Business Interruption Insurance covers the temporary loss of income that a business suffers after a disaster leads to its operations being shut down.
It is linked to a property insurance policy and is sometimes called Consequential Loss Insurance. The additional coverage allotted by the business interruption policy covers the income that would have been earned, as the intention is to put a business in the same financial position it would have been if the loss had not occurred.
Business Interruption Insurance is not normally sold as a stand-alone policy, but will be added on to the property insurance policy or comprehensive package policy. Since Business Interruption is included as part of the primary policy, it only pays out if the cause of the loss also falls as a material damage claim.
The coverage extends until the end of the business interruption period, which is determined by you, the customer. Most policies define this period as starting on the date of the disaster and lasts until the damaged property is physically repaired and returned to operations under the same conditions that existed prior to the disaster.
Why you should consider it:
- Should be a key component of a company’s business continuity plan
- It is essential to work with an expert to estimate what cover you will need
- Unforeseen circumstances ranging from natural disasters to accidental failures of machinery and services can be protected against
- Lost profits – disgruntled customers
Policy features can include:
- Profits – profits that would have been earned
- Fixed costs – operating expenses and other costs still being incurred
- Temporary relocation – covers the extra expenses for moving to, and operating from, a temporary location
- Extra expenses – reimbursement for reasonable expenses that allow the business to continue operation
- Additional expenses – accountants fees & cleaning costs
- Cover for loss or damage to account records so unable to recover customer debts
- Damage to suppliers premises making your business unable to trade
- Denial of access to your premises
- Damage To public utilities
- Damage to suppliers/customers premises
Tel: 01934 623 656