What is

BUSINESS INTERRUPTION
INSURANCE

Business interruption insurance, also known as loss of profit insurance, protects your business in the event of property damage or machinery breakdown. It provides you with the necessary funding to start your business again, following an interruption of activities.

What is business interruption insurance?

Business interruption insurance is a type of insurance that covers the loss of income and direct costs that a business may suffer following events that are beyond control, such as an accident or natural disaster. It is meant to secure business owners and make sure they can go through an interruption of business following such events without suffering financial losses.

What does it cover?

Business interruption insurance will typically cover three aspects. First, the profit that the company would have earned if such an event hadn’t occurred. In such a case, the insurer will review the financial statement during the same period in the previous year and estimate the profit that would have been generated during this period.

It will also cover all fixed costs or normal operating expenses, which the company will still need to pay even though the business is temporarily closed. This would include the employees’ wages.
Other expenses like those incurred when moving to a temporary location may be covered if required, to continue work while your premises is being restored.

There is usually a 3-day waiting period before the coverage comes into effect. It is limited in time (usually 12 months).

What is the maximum cover I should have?

Maximum cover will be based on your turnover and fixed costs so just follow the calculation provided by insurer. The length of coverage will depend on how long it will take for your company to renovate or rebuilt a new site. We usually insure for a period of 12 month but this length can be reduced or extended depending on nature of project insured.

How much does it cost?

Business interruption insurance is not a stand-alone policy. It has to be purchased together with property insurance or business owner’s policy. The premium will be a percentage of the sum insured, based on company’s turnover and fixed costs.

Is business interruption insurance compulsory?

Business insurance is not compulsory and but any business that requires significant assets to run its operation should consider this coverage. Contact us if you have any questions about Business Interruption Insurance.

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