The types of Business Interruption insurance available
Insurance policies use different terminology and take different approaches to they way they insure for business interruption. The issue for you as the buyer is to ensure you match your needs to the covers available and get the most appropriate. Do not buy on price or speed. It is too important a decision for you and the ongoing prosperity of your business to do that. When a claim occurs you do not want to find that you are trying to fit a round peg (your claim) in a square hole (your policy cover). It could be disastrous if it does not fit as you expect and need.
Under many package policies there is more than one way to insure against financial losses as a result of business interruption. They can be grouped broadly as:
Option 1 – Traditional Cover
This type of cover is called different things by different insurers. This section is most often referred to as Consequential Loss of Profits (ISR policy), Gross Profit, Annual Gross Profit, Annual Income, or Gross Income. It is for this type of cover that our e-CoverCalculators have been developed.
Option 2 – Weekly Income
In business, office or trade package policies this type of cover has been developed as a simplified cover for smaller businesses, particularly those just starting out. While this form of cover has its place it may not provide full cover to all businesses. If in doubt please discuss it with your insurance broker or adviser who can explain all the various covers available.
There are also specialist underwriting agencies, such as Interruption Underwriting Agencies, which are arguably the best known who offer weekly benefits cover. This has been developed for all types of business and you may wish to discuss this option with your insurance broker or adviser who can explain the features and benefits of this and other products.
Option 3 – Additional Increase in Cost of Working
Additional Increase in Cost of Working only cover. This cover has been developed for a business which has determined that they will not lose any revenue as such following any type of insured loss, but will incur increase costs to continue to operate. This may include relocation costs, overtime to staff, redirecting phones, internet, etc and advertising to customers of the change of address. While there is definitely a place for this cover it often is found lacking when the crunch comes. It is not recommended for use by manufacturers, retailers or in place of loss of rent cover.
Besides these basic types of cover, each has different options in respect of the additional benefits that they provide. We recommend that you discuss these options with your insurance broker or adviser who can explain the features and benefits of the various products available.
In many cases the base wording can be optioned up to suit your needs and this is where a good insurance broker or adviser comes into their own.
Get the right advice
If you are in any doubt on which of the above options is best for your business, please discuss it with your insurance broker or adviser who can explain the features and benefits of all the various covers available.