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Last edited 01 Dec 2014

Business Interruption Insurance

A typical 'commercial combined' insurance policy taken out by a business will have a number of sections which provide cover for both 'material damage' and 'liability' events.

Typically equipment will be insured against loss or damage and the company will be provided with employers liability insurance and public liability insurance cover too.

Business interruption cover is often provided as well. This covers the additional expenses incurred by a business following loss or damage. Cover is usually on an 'all risks' basis and can be extended to cover loss of income.

Events that may be covered include:

  • Enforced closure of premises due to a notifiable infectious disease at the premises.
  • Damage to property in the vicinity of the premises which hinders or prevents access to the premises.
  • Damage at a supplier’s premises.
  • Accidental failure of telecommunications at the premises lasting at least 24 hours.
  • Accidental failure of public supplies of electricity, gas or water lasting at least 30 minutes.
  • Damage to documents in transit.

Loss of income is a significant risk where an event has caused major disruption to a business so cover is available for a maximum indemnity period which insures an agreed and justifiable estimate of loss. If, for example, a business is unable to trade for three months due to a major event then loss of income cover reimburses the amount of income agreed as being lost during that three month period.

This article was written by: --Martinc 08:30, 23 July 2014 (BST)

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