A big concern for a lot of business owners is what will happen if their place of business were to be damaged severely and they were not then be able to operate for several months, or years. What might happen to themselves, their business or their employees?
Business Interruption insurance offers a way to give them peace of mind in these difficult situations.
Business Interruption Insurance
Business Interruption insurance is designed to protect a business from ta loss in net profits sales have been affected.
Business Interruption generally covers a ‘physical event’ (such as a flood, fire or an earthquake) damages your place of business and you are unable to carry on as normal. There are, however, different types of cover, so it pays to find out exactly what your insurance company offers.
It’s possible you could claim for any profits you would normally of earnt, or operating expenses such as rent or wages you’re continuing incur even while your business is inactive. You might also be able to find options which cover:
- The increase of costs from continuing to do business (such as finding a new premise or hiring new equipment), while waiting for a rebuild and recovery.
- The added cost of paying for an accountant to calculate the amount of your loss and the time your business is affected by the damage.
Claims will rely on a ‘claimable event’ – which means anything covered by property insurance. Usually this is physical damage, but it could also include ‘contingent losses’, like if local authorities stop you from gaining access to your business (like after a natural disaster).
It’s important to remember things like equipment wear & tear, breakdowns or computer viruses aren’t likely to be covered.
How to make a claim
Should something happen and your business premises are damaged, the first thing to do is make sure everyone is safe. After any immediate damages are taken care of, contact your insurer or insurance broker as soon as you can to inform them of what has happened. In addition to getting your claim started, they may be able to offer assistance or advice with next steps – Business Interruption claims can be quite a complicated process and it’s a great example of how a broker can make the process easier for you.
Once your claim is lodged, a loss adjustor will be appointed for you. They will assess the impact on your business, considering factors like sales and profit from the same time last year, the length of the interruption, any new plus existing costs and what stage your business is at, i.e growing, established etc.
The calculations can be quite involved, so some business owners might appoint their own accountant to make these calculations, which are passed on to the loss adjustor, who reviews the figures and works with you to determine a settlement.
As part of your insurance, you can include the cost of your accountant for this work, so check whether your policy includes cover for advice when making a claim or not.
Because any Business interruption claim will require proof of your business earnings or increased costs, it’s important to keep all your records in a secure location (and make a backup!).
Do I have the right cover?
Every business is different, meaning there is no one-size-fits-all policy.
An insurance broker or adviser is best at helping you identify your risks, understand your requirements and help put a plan in action which works for you and your business.
If you want the added peace of mind of Business Interruption cover, talk to High Street Insurance Brokers to find a policy that works best for your unique business circumstances.
