Some of the effects of losses include reducing sales or turnover, supporting the payment of continuing expenses out of reduced income, incurring additional costs to minimise losses suffered, and potentially losing long-standing customers. Business interruption insurance provides that following a claim, monthly expenses such as employee payments, rent, and other fixed costs will be paid by your insurer for the length dictated by the indemnity period.
How Does It Work?
Your broker must use the business's normalised annual turnover under favourable operating conditions to assess the required insurance cover. The insurer must reinstate damages under the fire policies and start paying costs such as staff salaries and wages, rent, hire purchase costs, and any other monthly recurring costs to get the business back to turning over profit following an insured peril. Moreover, the insurer must pay the difference between the normal turnover and the post-peril turnover until either the indemnity period chosen is exhausted or the business returns to normal.
It is a common problem that business owners often select an insufficient ‘indemnity period,' and most claimants are surprised by how long it takes to get back to ‘normal’ business after disaster strikes. Therefore, loss adjustors recommend an indemnity period of at least 12 months, and in the case of large manufacturing risks, that period can stretch up to two years or more.
Ensure Your Business’s Survival
It is important to acknowledge that any business interruption, no matter how small, has the potential to pose a significant challenge for a small business, particularly during challenging trading conditions.
As a result, it is essential to ensure that your business is covered and protected against the unforeseeable by considering long-term business interruption insurance.
It is crucial to secure your business's survival and safeguard your employees' livelihoods.
