Business interruption

The costs keep running, the turnover does not

The value of business interruption cover is often underestimated. It pays for the operating profit you lose and for the costs that continue while the business is at a standstill after damage by fire, mains water, storm or machinery breakdown. Wages, rent, leasing instalments, interest and insurance premiums carry on unchanged while the income stops.

Replacement is the critical point: delivery times for special purpose machines, permits for rebuilding and the effort of setting up new supply relationships often take longer than planned. Anyone who calculates the interruption period too tightly ends up without cover, even though the property claim was settled long ago.

Establishing a business interruption loss takes time. It draws on management accounts and often requires agreement with loss adjusters. We guide you through that process and prepare the documents together with you.

Sum insured, indemnity period and extended cover

Like a solid house, good insurance cover can only be built after careful planning. We support you in working out the sum insured, in setting the indemnity period and the extended indemnity period, and in choosing the perils to be insured.

The sum insured is derived from the operating profit and the standing charges of one financial year. The indemnity period sets how long the insurer pays after the loss. Twelve months is the usual starting point; where delivery times are long or plant is highly specialised, longer periods make sense. If your business grows during the policy year, an agreed provision clause makes sure the sum grows with it.

Events at other companies can hit you too

Not every interruption starts in your own building. If there is a fire at your only supplier or at your main customer, your production stops as well. Such contingent losses can be included depending on the policy wording. The same applies to failure of electricity, gas and water, to closure of the access road and to official orders. Whether and to what extent these modules can be insured depends on the insurer and on the cover agreed.

For the machine park there is machinery loss of profits insurance. It applies where classic cover ends, namely with a technical defect without fire or natural hazard damage. We check which of these modules matter for your business and which you can do without.