As you may know, the intention of Business Interruption cover is to put your business back into the trading position it enjoyed before a loss (fire, flood , storm etc.) once the damage has been repaired & the business is back up & running. This can take many months, if not years, & it is important therefore to have an indemnity period (the length of time over which your cover will operate) that will allow the business to fully recover its trading position to its pre-loss level.
However, losses that directly affect your premises are not the whole story. Your business can be affected by losses that occur elsewhere, which you can also insure. Here are just a few to think about:
- Losses at customers’ or suppliers’ premises
If you are dependent on a particular customer or supplier, whether in the UK or overseas, a loss at their premises could have a significant impact on your ability to trade. Cover is available on a specified or non-specified basis for customers & suppliers.
- Failure of supply – e.g. gas, electricity, telecommunications
A failure of power to your business will significantly affect your ability to produce goods or otherwise continue to trade. Cover is available for losses that arise from losses at the supply undertaking’s premises or on a wider basis for anything that affects supply to the terminal ends at the point of entry to your premises.
- Denial of access
If property is damaged in the vicinity of your premises it could have a significant impact in preventing or hindering the use of or access to your premises.
- Loss of attraction
If property within the vicinity of your premises suffers a loss it may result in a diminished attraction to customers that would have otherwise visited the area & your business. This is particularly applicable to retailers who may benefit from footfall due to a big name store being nearby.
- Act of competent authority (e.g. bomb threat)
Cover is available for denial of access to your premises even when there is no physical damage to any property – for example if the police close the roads due to a bomb threat or other incident in the area
- Loss at a location where your property is stored
Cover is available to indemnify you if you suffer a loss of profit following a loss at a third party premises where your property is being stored
- Loss at a contract site
If a significant proportion of your turnover is derived from a particular site, cover is available to protect your income from a loss at that site
- Loss in transit
Cover is also available for loss of profit following damage to property in transit
It is important that you consider the impact of any/all of these scenarios when deciding on the right business interruption cover for your business. We at ProAktive can help you review your existing cover & make sure it meets the needs of your business. Please contact a member of the team if you wish to discuss in more detail.
By Beverley Brown FCII MBA – Broking Director & Chartered Insurance Broker