This section of a shop insurance policy provides cover for loss of the insured’s income and additional expenditure incurred for a specific period of time (the indemnity period) following insured damage to the business premises or contents.
Any reduced expenditure, such as a reduced wage bill during the indemnity period will be taken into account when settling the claim.
Whilst most small businesses see the need for buildings and contents cover, many do not appreciate how much their business could suffer from a loss of income or increased expenditure incurred due to the need to rent alternative premises or pay increased overtime following say a fire, flood or major theft.
Package policies usually provide an indemnity period ranging from 12 to 24 months. If the insured feels that it could take longer to recover from serious damage, the insurer might be prepared to increase their standard limit in return for an additional premium.
Where Business Interruption cover is included as standard within the policy the insured needs to make sure that the gross profit limit is adequate for their needs. Alternatively, they may be able to select an appropriate sum insured / limit.
Cover extensions:
In addition to cover following the perils insured under the Buildings and Contents section, Business Interruption cover is usually extended to include loss of income due to the following:
Public utilities
Losses from failure of electricity, gas, telecommunications and water services, but not if this was due to the insured not paying their bills.
Denial of access
Loss due to denial of access to the insured s premises following damage at adjacent premises - some insurers allow this to be extended to include loss of attraction, for example, if the insured usually gained custom from passing trade whose destination was damaged.
Customers and / or Supplier s extension
Losses from a customer or supplier suffering damage at their premises and this impacting on the insured's profit levels.
Closure by Local Authority
Losses following closure by the Local Authority due to disease or food poisoning, the discovery of vermin or murder/suicide at the insured’s premises, sometimes extended to include the surrounding area.
Book Debts
Losses following debts that the insured is unable to trace and collect following his business books or records being lost or damaged. This extension would also cover additional costs involved in such collection as well as any professional accountant’s charges.
There is often a policy condition stating that back-up records must be kept in a fire-resisting safe or at a different location.
Loss of Licence
This is a typical extension on policies designed for trades licensed to sell alcohol.
Loss of profit and appeal costs is covered following a withdrawal of the license by the local authority.