Would your business survive a major claim, or would you run out of cash?

I mentioned in last week’s post that I am constantly seeing that SME’s aren’t receiving the right advice. The same issue also applies to Property Owners and Property Management Companies too.

A common theme is the Business Interruption section of the policy.

If you’re a business owner, financial advisor or accountant, you need to be aware that a major loss could see the business fail and the owner’s personal financial plan in tatters. It’s therefore vital you are working alongside a broker to provide the right advice.

In today's ever-changing business landscape, it is crucial for business owners to have a thorough understanding of their insurance policies. While many focus on property and liability coverage, one often overlooked area is business interruption insurance. Surprisingly, countless businesses are incorrectly insured for business interruption, leaving them vulnerable to unforeseen events and potential financial ruin. Allow me to shed light on this critical issue and emphasise the importance of having the correct indemnity period, level of cover, and exploring relevant extensions to protect your business.

1.      Indemnity Period: One of the most critical aspects of business interruption insurance is the indemnity period. This period defines the duration for which your business will be covered after an insured event, such as a fire or natural disaster. it is crucial to assess the time it would take for the business to recover fully and choose an indemnity period that aligns with this timeline. Underestimating this period may leave your business without adequate coverage and financial support during the recovery phase.

2.      Level of Cover: Determining the appropriate level of cover is another key consideration. It is vital to accurately assess your business's gross profit or revenue, taking into account potential growth and seasonal variations. Underinsuring can leave you with a significant financial shortfall when you need it most. On the other hand, over-insuring could mean paying excessive premiums unnecessarily. Collaborating with a knowledgeable insurance broker can help you strike the right balance and ensure your coverage aligns with your business's specific needs.

3.      Extensions to Cover: Business interruption insurance can be customized with various extensions to provide comprehensive protection. These extensions address specific scenarios that may disrupt your operations. Some commonly available extensions include:

🔹 Supplier and customer extensions: Covering the financial losses incurred due to disruptions in your supply chain or loss of key customers.

🔹 Denial of access extensions: Protecting your business when access to your premises is denied, either due to a government directive or other external factors.

🔹 Unspecified location extensions: Providing coverage for losses incurred when conducting business at locations other than your primary premises.

🔹 Infectious disease extensions: Covering losses arising from the outbreak of infectious diseases.

By exploring these extensions, you can tailor your business interruption insurance to your unique circumstances and safeguard against unexpected challenges.

Feel free to reach out if you have any questions or require assistance in assessing your business interruption insurance needs.

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