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Why You Need Robust Business Interruption Insurance

When disaster strikes, business interruption insurance could save your company. But not all policies are created equal. Making sure you have adequate cover is critical to protecting your business's financial future.

We recently saw a major fire at the Luton Airport multi-story carpark which disrupted operations for the airport, nearby rail line, parking business, meet-and-greet service and more. This real-life example shows just how many ripple effects one incident can have. And with Brexit, inflation and more putting pressure on businesses, recovery timelines are longer than ever.

That's why having robust business interruption insurance matters. Here's what to know:

Indemnity Periods - Make Sure It's Long Enough

Business interruption insurance tides you over financially until business is back to normal after a covered incident. This period is called the indemnity period. Many companies opt for 12 months, but that often isn't enough time to fully recover nowadays. Consider at least 24 months, working with an expert broker to determine what's right for your business based on realistic recovery timeframes.

Gross Profit - Understand What It Means

A key component in crafting your policy is gross profit. It's not just an accounting term here. Gross profit calculations for insurance purposes factor in ongoing costs like rent and salaries you would still owe if forced to close temporarily. Using the common accounting definition instead can shortchange your payout. We offer tools to help calculate this correctly.

Work Closely with Your Insurer

You play a role too by giving your insurer accurate, up-to-date financial information. The policy limit also needs to reflect anticipated business growth over the policy term. With a 36-month indemnity period, for example, you'd want to account for reasonable expansion over the next four years.

Robust business interruption insurance can make all the difference if you face an unexpected catastrophe. Take time to understand coverage gaps and work closely with an expert broker to customise protection for your company's situation. Reach out for a consultation on ensuring you have adequate safeguards in place.


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