What is business interruption insurance?
14th October 2016
Business interruption insurance can be added to an overall business insurance policy, providing cover for loss of income and helping a business get back on its feet financially. Whilst property insurance would look after the resulting damage of say a major water leak, the impact of such an event might leave the business unable to complete its schedule of orders. This is where business interruption comes in to cover loss in revenue.
Having the right level of business interruption cover is really important. UK insurer Aviva found that around 62% of UK SMEs do not have business interruption insurance or are not sure it is included in their current business insurance policy.
Business interruption insurance is based on an accurate assessment of the amount of time it would take for your business to recover from an event that impacts your normal operations – this is called the indemnity period.
Making sure you have calculated this correctly is key to protecting your business income and cash flow until the business is running as it was before any event occurred.
The recovery process often takes longer than you think – even small, straightforward businesses often need longer than 12 months protection. For example, planning permission can often take months before any rebuilding works can even start. If you need specialist equipment think about how quickly it can be sourced.
It is also worth remembering that if you haven’t been able to trade for a while, your customers will have gone elsewhere! So you will need time to rebuild your customer base and for your turnover to return to pre-loss levels. This should be factored in when calculating the length of time you want your business interruption to cover.
For a no obligation business interruption insurance quotation for your organisation please contact Horner Blakey on 020 7929 0108