What is Business Interruption Cover?
Put simply, Business Interruption Cover insures you against losses of income that could occur if you were unable to trade due to an unexpected event such as damage to your premises or other assets.
What does Business Interruption Insurance cover?
Whatever your business, an unexpected event that could prevent you from operating in either the short or long term could be potentially disastrous.
For example, if a number of properties within your portfolio were damaged in a flood, you could potentially lose significant income.
If your business was unfortunate enough to be affected in this way:
- How would you continue to pay the bills?
- Would you be able to maintain your relationship with key customers, despite the damage?
- Might there be a risk that you could lose vital staff?
By taking Business Interruption Cover through Stanmore, you would be protected against lost income, usually for a period of 12, 24, 36 months, we will advise you on the most appropriate time-period for your business. This is known as the Maximum Indemnity Period – the length of time we cover your losses, starting from the date of your initial claim.
It would also meet any extra costs associated with making alternative arrangements to help keep you working. These could include renting alternative premises if yours have been damaged, or replacing broken equipment.
Why Business Interruption Insurance Cover
Business Interruption insurance provides cover for loss of revenue when an event disrupts your normal business activities. Your other insurances will cover the cost of restoration, but while your premises are being repaired, it won’t be taking income. Business Interruption helps you recover these lost earnings.
Getting your Business Interruption insurance cover right:
- Know how you’ll react in a crisis– make sure you have a quality Business Continuity Plan, which is regularly updated. Consider the ‘what ifs’ and make plans to reduce disruption for both you and your customers.
- Understand your numbers. One of the most common mistakes made when arranging Business Interruption insurance is to base the loss of revenue on last year’s figures. With any luck your business is growing and will continue to over the next 12 to 24 months. Therefore the numbers you tell your insurer need to be based on your projected figures.
- Know how long it will take. Your indemnity period must give you adequate time to get your business back to where you were pre-disaster. It must also be long enough to cover the worst case scenario (your building has to be demolished or there needs to be a HSE inquiry).
Your account handler
When thinking about Business Interruption Insurance Cover its important to remember that the cost of insurance is much cheaper than the cost of recovering your business after a disaster. It’s vital that you are prepared, when was the last time you updated your Business Continuity Plan? – Craig Wilson
How does Business Interruption Cover protect your business?
The two most common events that can cause Business Interruption to your organisation are fires and floods. As well as affecting your premises, this could also have a devastating effect on business equipment, such as computers, or stock and other valuable business assets.
While you may be able to replace laptops relatively quickly and easily, these will be covered by your contents insurance. More specialist equipment may take much longer to replace – time that could cost your business dearly, Business Interruption Cover looks after your business while you wait for your new equipment to be installed.
What is more, it might not take a river bursting its banks to devastate your business. A pipe that bursts overnight could be enough to put you out of action.
Business Interruption Cover can also protect you against losses incurred as a result of theft and vandalism, as well as failure of utilities. So, if a disrupted energy supply stopped you from working for a prolonged period of time, you would be covered.
To ensure the amount of cover you have is adequate, we will work with you to calculate your sum insured based on your projected figures for the relevant period. That way by the time your business is back up and running, it should reach the same place financially, if the event was never to have happened.
Do I really need Business Interruption Cover?
In our experience, businesses often ask, “Do I actually need Business Interruption Cover?” – believing that their other policies, such as buildings and contents cover or commercial property insurance, will offer them adequate protection against fire, flood or theft.
While these insurances may cover the initial damage caused, they will not cover you against the further losses that could occur from these events preventing you from resuming trading.
So, if a flood meant you had to wait two months for your premises to dry out, you would only be insured against this loss of income if you had Business Interruption Cover – which could help you to stay afloat until you are able to resume normal operations.
Talk to Stanmore the insurance people about Business Interruption Cover now – call our team on 01204 570 370