Business Interruption Insurance


Cover Provided

   Covers against loss of Gross Profit resulting from reduction in turnover and any increase in the cost of working following a loss covered by the Property All Risks or Fire and                                 Perils policy. Cover can be taken for the maximum period of the anticipated interruption to normal business activities.

Extent Cover 

Any loss will be considered so long as there is cover for the material damage element under the Property All Risks or Fire and Perils policy.

When setting the sum insured, the policyholder should ideally consult with their accountant to make sure all figures are adequate.  The sum insured will usually be set by calculating estimated Gross Profit using one of two methods:

1)    Addition Basis     =  Net Profit + Standing Charges
2)    Difference Basis     = Turnover + Closing Stock less Opening Stock + Purchases + Specified Working Expenses

In addition, the policyholder will also need to take account of future inflation and factor in where the maximum period of interruption (The Maximum Indemnity Period) is longer than 12 months

As this is just an estimate of future profitability, the insurer can arrange the Business Interruption policy on a ‘Declaration Linked’ basis whereby the policy will be adjusted at the end of the policyholder’s financial year to take account of actual Gross Profit.

The perils covered and situations excluded will be as defined in the main property policy.

Available Extensions

   -    Denial of access 
   -    Group Interdependency – where loss is suffered due to a contingency occurring at another of the policyholder’s premises Specified customers or suppliers
   -    Failure of public utilities (telecom, gas, electricity, water)