Business Interruption Insurance
Help to calculate the cover you need
Do You Have the Right Cover?
Use our business interruption calculator to find out if you have the right cover.
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.
Anthony Jones, in partnership with Zurich, can provide you with a business interruption calculation to help you avoid underinsurance. Working together, using the calculator tool, we can help to pinpoint the business accounting and operational factors that need to be considered in working out the right level of business interruption insurance cover.
While the calculator gives a guide rather than a definitive final figure, it will help you to assess the business interruption sum more accurately and avoid the risk of underinsurance.
If you do a business interruption insurance calculation with us either before or within three months of your policy starting, we will give you a 10% discount on your business interruption insurance premium. This discount is provided in recognition that your sum insured and subsequent premium may be higher than expected.
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.
Some of our most asked questions, answered below:
What is Business Interruption insurance?
Business Interruption insurance covers you for loss of income during a period of time when you are unable to trade because of an unexpected event, such as a flood or fire.
The aim of Business Interruption insurance is to put your business back in the position it was before the event happened and as though it didn’t happen in the first place.
Do I need Business Interruption cover?
Because Business Interruption cover isn’t protecting a physical business asset, this is often overlooked when businesses are thinking about what business insurance they need. However, depending on how long your business is unable to trade, this can be the most valuable insurance of all and can amount to quite a large pay out.
How much Business Interruption cover do I need?
The amount of cover you need will depend on a number of factors, including the size of your business, typical monthly turnover and how long you estimate it would take to get back up and running if you were impacted by an event such as a flood or fire.
It’s estimated that almost half of those businesses with Business Interruption insurance don’t have enough cover so our recommendation, as with other insurances, is to buy as much as you can afford.
We have access to a tool that enables us to calculate how much BI insurance your business might need so it’s worth having a conversation before you go ahead and buy it.
What indemnity period for Business Interruption Insurance do I need?
Business Interruption insurance is designed to put you into the financial position as if the claim had never happened. As such, the indemnity period needs to be long enough to get you back trading at the same level as if the loss had not occurred. Whilst property can be replaced or rebuilt relatively quickly, it may take much longer to recover the same level of sales and market share. Surveys have shown that most businesses do not have adequate indemnity periods. As a rough guide, we rarely recommend anything less than 24 months.
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