When it comes to protecting your business success, there can be much more to it than just insuring physical assets and protecting employees and members of the public.

Maintaining your business operations or having the cash flow to make payments for remedial work after a major incident all require the right level of business interruption insurance cover. This cover aims to return your business to the same trading position as if the incident or loss had not occurred.

According to the Chartered Institute of Loss Adjusters, 40% of businesses with business interruption policies are underinsured, which demonstrates just how difficult it can be to work out how much cover is needed and set the right sum insured.

While many businesses probably understand the need for business interruption insurance, the level of cover required to maintain their operations is commonly underestimated and can lead to problems associated with underinsurance.

Reasons for underinsurance often include:
 

• The real cost of rebuilding a property against its market value.
• The length of time it takes to get back up and running at pre loss levels. Supply chain issues, planning complications to reinstate buildings, environmental considerations, reliance on key suppliers or customers all eat quickly into time.
• The costs of replacing plant and machinery costs. It’s important to keep up to speed with rising equipment costs as well as understanding the reality of delivery timescales for replacements. If it’s applicable, think carefully about exchange rate movements.
• A shortage of labour.