"80% of businesses suffering a bad loss don't recover"
What is it?
Business Interruption, also referred to as Consequential Loss or Loss of Gross Profit, is one of the most important covers for any business and can make the difference between a business surviving or failing.
If, after a fire or other event, you are unable to use your place of business and you need to relocate or even shut down for a while, Business Interruption insurance will cover the financial losses you incur as a result.
You can choose to cover Business Interruption for different perils such as flood, explosion or impact. The coverage period of a Business Interruption policy is also flexible and should cover the time it will take for your business to return to where it would have been, had the incident not occurred.
Who needs Business Interruption cover?
In a word, everyone. If you are unable to manufacture or sell your products, offer your services or even access your premises you will suffer a financial loss. If such an interruption were to be prolonged, it can wipe out many businesses.
Many people underestimate the catastrophic effect of a serious claim. As an example some businesses near the Buncefield oil terminal were unable to get to their offices for 12 months after the explosion in 2005.
A business interruption claim is typically three times larger than the claim for material damage from the original incident.
What does it cover?
Business Interruption covers the following areas:
- The cost of working out of a temporary location while your main premises are inaccessible
- The profits you have lost as a result of being unable to operate from your premises
- Operating expenses that you might still incur even if you are unable to work in your premises (such as utility bills)
To insure against business interruption for any peril (eg: explosion) you must also have the corresponding Material Damage cover in place.
What having Business Interruption cover means to you
Business Interruption cover protects you from the losses you could incur through an unforeseen event that prevents you from using your property. This may be something as obvious as a fire or something as obscure as the discovery of unexploded ordinance nearby.