Insurance Services > Commercial > Business Interruption


In the past these policies were known as Consequential Loss insurances because they paid claims for the financial losses suffered by a business as a direct consequence of insured loss or damage to their buildings or contents.

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Cover can either be arranged on the basis of:

1. the increased cost of working following damage to the material assets of the business or alternatively
2. on a more comprehensive basis which makes up any shortfall between the actual performance of the business following material damage, and the position it most probably would have been in if the damage had not arisen.

You need to be careful about the length of time you choose to be insured for. Some businesses may be able to return to full performance within weeks of even the greatest catastrophe, but for others it may take as much as 2-3 years or even longer.

By the same token, thought has to be given to whether or not the business would survive a prolonged period when it is unable to trade at full capacity. Perhaps the most important thing to remember is that if you choose the more comprehensive type of insurance you should set the sum insured at a level that reflects the business performance in the future. Your accounts will show how the business performed last year but, if you have a 12 month indemnity period, you need to have a sum insured to protect you against the losses you will incur in the 12 months after a claim for material damage that may arise in 12 months time - some 2 or even 3 years after the period that your accounts relate to.

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Numerous extensions are available to this policy to increase the protection for your business, such as:-

Denial of access - where insured loss or damage happens to other people's property but the authorities dictate that it is unsafe for you or your customers to use your own premises.

Public utilities - again losses that arise through insured loss or damage which disrupts the supply of water, gas, electricity or telephone supplies to your premises with the result that your business cannot perform in its normal manner.

Customers or suppliers - there can be insured loss or damage at the premises of a major customer or a major supplier with the result that you are unable to sell or deliver agreed purchases to them or simply find that fresh stock or tooling is either not available or is appreciably more expensive with consequent losses for the business.

Please note: The scope of protection under a consequential loss policy cannot be wider than the scope of protection you have chosen for the business buildings and contents.