Business Interruption Insurance (BII) is probably one of the most valuable commercial insurance policies a company can have. Simply put it’s the insurance that will keep you in business while you put your business back together.
Yes, chances are this kind of disaster isn’t going to happen to you. Yet, accidents do happen which is why employers liability insurance is needed by law. You have to consider the risks and insure yourself accordingly.
BII can cover a variety of events that may affect your business. Not just fire but loss of power, loss of other utilities, loss of a key supplier, loss of a key customer, storm damage, weather related flood damage or a leaking pipe.
BII will compensate you for the reduction in gross profit while you are unable to trade. This enables you to pay your on-going costs such as rent, electricity and the salaries of critical staff. Extra Expense can cover your costs should you move your business to a temporary location.
Sadly many businesses that suffer a crisis, directly or indirectly will no longer be trading 12 months later. The flash floods in Devon devastated many businesses, some of which took 2 years to start trading again.
How long your insurance lasts (the indemnity period) depends on your business. This needs careful thought. If your business burns down you have to include the time to demolish and clear a site, time to commission the rebuild, time to rebuild, time to re-staff your business and time to get the business back to where it was. If the specialist piece of equipment 80% of your orders rely on gets damaged, you need to consider the time taken to locate a new supplier, for the equipment to be made and the turnaround time of the supplier who may be backed up with orders for the next 12 months.
Business Continuity Planning (BCP ) will help you understand your business risks. You’ll be able to think through the high and low risk events and how you would manage the business through any event. A BCP will help your insurance broker understand your risk and get the best policy to meet you exact needs.
Business Interruption Insurance isn’t a one size fits all policy. It needs serious consideration to ensure you get the coverage you need for how ever long you need it. Get in touch and I’ll happily walk you through the process.
