Business Interruption Insurance

Most companies realize the importance of insuring a physical asset. Not only is it often a requirement of the financer that the asset must be insured, but given that particular assets are central to a businesses existence, it makes perfect simple sense to protect them. But what would happen if a disaster were to occur? If a fire, flood or storm were to destroy your property, yes, you may receive a payout, but what would happen to your business income if your damages property

meant that your business could not function regularly? After all, it takes time, and often lots of it to repair or replace assets, especially in more complex industries. This is where a quality Business

Interruption policy may mean the difference between bankruptcy or survival.

Business Interruption insurance works on the principal of putting the organization whose operations have been hindered into the same position had they had not been. When an incapacitating loss occurs, Business Interruption insurance shall put back into the pockets of the business, the moniesthat would have been generated by the assets that have been lost.

Take for example a recent restaurant fire, which destroyed the kitchen area of the property. Whilst the property was covered, the 8 weeks that it took to rebuild the kitchen meant a lost income stream of $100,000. Fortunately, the restaurant had an adequate Business Interruption policy in place, meaning they could cover their fixed costs whilst the damage was repaired.

Business Interruption – What you need to know:

Period Of Interruption

The period of interruption refers to the reasonable amount of time required for the insured to resume normal business. In other words, if your business were to succumb to some form of disaster-say for example business property burnt down, how long would it take for you to build that business back up to how it was prior? Think about regaining lost clientele, re-commissioning systems, and the length it would take to reinstate complex infrastructure. If you believe that your company may take longer than the usual policy standard of 12 months to resume normal operations, it is possible to extend the period of interruption.

Additional Increased Cost of Working

In the event that some form of damage stops the regular function of your business, Additional Increased Cost of Working cover, if selected, may indemnify you for the extra costs involved in getting your business back up and running again. For example, if your office burnt down, and to minimize the loss, you set up a temporary office up in a temporary location, the policy may cover you in the extra expenses involved in doing this. If you would like to discuss Business Interruption Insurance, please do not hesitate to contact us.