Business Interruption or Consequential Loss Insurance; getting the indemnity Period correct.
Business Interruption Insurance can be what stands between the collapse and the survival of your business following major loss such as a fire, flood or storm. As important as getting the sum insured right is ensuring that you have the right indemnity period for your business. This article will help you understand the factors which should influence how long a Business Interruption Insurance indemnity period your business needs.
Your first consideration is to decide upon which basis you will be arranging your Business Interruption Insurance (Loss of Gross Profit, Loss of Revenue, Increased Cost of Working, Additional Increased Cost of Working etc.?) your next key decision is then to select the correct length of Maximum Indemnity Period.
The Business Interruption Insurance Indemnity Period is the period during which the business’ results are affected due to the loss or damage, beginning with the date of the loss or damage and ending not later than the Maximum Indemnity Period. The Maximum Indemnity Period is stated within your Policy Schedule. Common Maximum Indemnity Periods are 12 months, 18 months, 24 months and 36 months. When deciding upon the length of the period you need to work out how long it would take your business to recover back to today’s trading levels following a Fire, Theft or Flood. Factors that you need to consider include:
Business Interruption Insurance can be a complex area. You need to get the cover basis, the sum insured and the maximum indemnity period correct to help your business to survive a major loss. I hope you have found this article useful and it will help you when considering the length of the business interruption insurance maximum indemnity period most suited to your business.
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