Business Interruption is largely missed by most policyholders if you don’t ask for it to be on your insurance policy. That’s usually due to business owners believing that other insurances such as buildings and contents policies will take care of everything if their operations are interrupted by events such as Burglary Damage, Impact Damage, fire insurance claims, building insurance claims. Those policies will usually put the damage right, but they make no allowance for the resulting financial loss to your business. For all businesses, the lack of business interruption cover can often lead to a business termination! There are many causes of business interruption. No one ever expects these disasters to occur to their business so when they do they usually expect other policies to cover all of their losses.
Let’s talk about an example where a pipe burst in a business. Yes the stock and plant or machinery can be replaced, as can computers or other materials. However a soaking wet building could need a few months to dry out. We have seen some badly flooded buildings take more than six months to be usable again. Imagine if the equipment has a long order lead time – some bespoke machinery can sometimes take just as long to replace. If you cannot trade in the interim, you will lose income, use all your reserves up and possibly run out of money. You may lose experienced staff as well as valuable customers. Customers are fickle they will go down the road if you are unable to meet their needs.
Business Interruption Insurance covers financial losses that are a direct consequence of a fire or flood. Remember that it will assist with elements such as loss of profit, loss of rental and additional staff costs. Business interruption looks forwards not backwards so quite often a BI claim runs for several years as the financial loss to a business continues long after it reopens. You may also have other costs such as marketing and advertising that are needed to get customers back on board. These are all taken into account with Business Interruption. A good Loss Assessor will be able to help calculate this. Remember Loss assessors work for you and Loss adjusters represent the insurance company. Any claim where there is BI will usually need the assistance of an insurance claim management company or specialist.
Insurance claims management is an art. A Loss Assessor is an Independent entity hired and paid by the insured (policy holder) to negotiate, prepare & present an insurance claim with the insurance company and loss adjuster (insurance company). The Loss Assessor receives a fee that is usually a percentage of the claim amount received by the insured but on average gets a policy holder far more than they would do themselves. According to the Times, engaging a Loss Assessor gets you about 30 – 40% more than you could on your own merits. At the end of the day you are entitled to what the policy caters for, even though this is often not what insurers offer you.