Simply having funds available to replace destroyed assets is not enough. Reinstating buildings and contents takes time, causing an interruption in business activities, often resulting in significant losses and possible business failure.
Protection is available under a business interruption policy, which allows your business to plan with confidence, knowing that if the worse happens, staff can be retained, bills paid and profit maintained until recovery.
We work with clients to assess exposure to risks and identify areas that require protection because they’re outside of our client’s control, such as key suppliers, where damage at their premises could have a devastating effect on your business.
We have expert knowledge in establishing business interruption protection for most clients. Importantly, we have extensive experience in dealing with claims and the mechanics of how any policy operates ensuring a correct and quick settlement.
Business interruption insurance is can be vital to keeping an organisation running. It can provide:
Getting the right level of cover is crucial. Simply taking the gross profit figures from your company accounts will not necessarily provide the cover you need.
Bear in mind that the insurance industry definition of a ‘gross profit’ is different from the one your accountant would use. Insurers tend to define gross profit as follows: turnover less uninsured working expenses and bad debts, adjusted for the difference between stock and work in progress between the start and end of the financial year.
When calculating business interruption sums insured, consideration should also be given to the amount of time covered by the policy – also known as the indemnity period. In many circumstances, a minimum indemnity period of 12 months should be sufficient but it is important to take into account factors such as time taken for site clearance, design and planning applications, rebuild time, replacement of plant and machinery, sourcing stock and rebuilding the customer and supplier base which may lead to a higher limit such as 18 months or more, being required.
Yes. Even if a company is in a development stage, without sales revenue, there is a need for protection.
Any delay following damage can burn investor cash. Key teams will also need to be paid and kept together, requiring additional investor funding, which may not be available.
Tailored policies are also available to protect R&D expenditure. This provides payments for the company’s costs during the interrupted period.
Business interruption insurance tends to be arranged for a minimum of 12 months, but more often 24 or 36 months. It depends on your business’ risk profile.