Business Interruption Insurance Explained

Business interruption What is business interruption insurance?

Business interruption insurance is designed to help businesses through periods when they are unable to trade due an unexpected setback such as a fire or flood. It covers loss of income and additional expenses and aims to ensure that the business stays on a firm financial footing.

Business interruption insurance isn’t designed to cover the ‘material loss’ of a buildings or contents claim, but rather the ‘consequential loss’ of making a claim. Hence, if your premises are out of action (due to a storm, fire, flood or vandalism claim); your business is still safe.

Business interruption insurance covers loss of income, allowing business owners to pay their bills and their worker’s wages. It also covers knock-on costs (such as renting new premises for the duration of the claim or associated legal expenses), allowing business to keep trading and keep their customers happy.

Business interruption insurance also covers consequential losses triggered by contents insurance claims, making it vital for businesses reliant on specialised equipment that would take time to replace if damaged or stolen.

If you are not sure whether business interruption insurance is right for you: just ask yourself whether you could keep trading if disaster struck your workplace. Your business might be able to deal with a hiccup, but could it cope for 12 months or would it prove terminal?

Do I really need business interruption insurance?

Business interruption insurance is often overlooked because business owners mistakenly believe they are already covered under another policy; when it’s rarely the case. Business interruption insurance can be bought as an ‘additional benefit’ when arranging buildings or contents insurance, but it’s seldom included automatically.

How are business interruption insurance claims calculated?

Pay-outs are designed to cover shortfalls in pre-tax profit and provide compensation for any additional running costs caused by the claim. Policy terms and conditions vary but most provide cover for a period of up to 12 months, although longer periods of indemnity can be arranged.

What’s the best way to buy business interruption insurance?

Business interruption insurance is rarely sold as a standalone product, but is generally packaged as part of a commercial insurance policy (most commonly buildings or contents insurance). It can be complicated and that’s why it pays to use a trusted broker to arrange cover.

Quoteline Direct is an independent insurance broker with over 45 years’ experience. We’ve got a dedicated commercial insurance team and the industry muscle to negotiate some seriously competitive policies. To find out more about business interruption insurance visit the commercial insurance pages of our site or Tel: 0161 874 8020 to speak with a consultant.




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