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Loss of Profits/Business Interruption

 

Many businesses fail to recover from a ‎major event such as fire, storm or earthquake as overheads (such as wages and rent) continue even though the business may be unable to trade.
 

Financial loss to the business will arise from an inability to operate or trade at normal levels causing cash flow to be affected. In fact, most businesses suffer a reduction in turnover rather than a total stop to their operations. Income may cease for a period whilst the property is being replaced, however there may still be loan repayments to make, employees to pay, and key customer accounts to manage.

It is an accepted fact that over 50% of businesses that suffer a physical loss and that do not have business interruption cover, will not resume their normal business operations.

Business Interruption provides cover for consequential loss of income and/or profits or revenue resulting from the interruption of, or interference with your business caused by damage covered under the Fire and Perils, Theft, Money or Glass sections.

Cover options available under this section include:

Part A - Business Income Protection: provides cover for weekly income, additional expenses such as relocation costs, expediting expenses and claims preparation expenses incurred due to a defined event. As this cover provides “weekly cash flow”, it is suitable for one or two person service operations that maintain minor supplies of Stock in Trade. Your business expenses should not be significant when compared to income (e.g. retailing).

Part B - Consequential Loss of Profits: provides cover for gross profit, payroll and claims preparation expenses incurred due to a defined event. This cover is for business’ that require a lead-time to get back into business and trade at the same level as before the loss. (e.g. manufacturing, retailing, wholesaling, property owners). These businesses will have higher expense ratios as they may manufacture products and/or they may have a significant Stock in Trade. Typically, they will have a number of employees.

Part C - Revenue Protection: provides cover for gross revenue and claims preparation expenses incurred due to a defined event. This cover is suitable for service/professional occupations which have a higher gross income and where no manufacturing or turnover of physical product occurs.