After a fire or natural catastrophe, damaged buildings and machinery can be covered under the property policy, yet the income lost while production or sales are halted is often overlooked. Business interruption insurance aims to protect your financial position during this period by covering the reduction in gross profit and continuing fixed costs such as payroll and rent.
As a rule, this cover operates only when there is a physical loss insured under the property policy. Calculating gross profit correctly and selecting a realistic indemnity period, long enough for the business to return to its previous level, directly determine how effective the policy will be. Supplier and customer dependency risks can also be addressed through extensions.
Who is it for?
- Industrial businesses whose output depends on specific sites
- Retail and service businesses with high fixed costs
- Companies dependent on key suppliers or customers
- Businesses with bank financing and contractual obligations
Scope of cover
- Loss of gross profit: Reduction in profit resulting from a fall in turnover
- Continuing fixed costs: Payroll, rent and similar standing charges
- Increased cost of working to keep the business running
- Losses arising throughout the agreed indemnity period
- Suppliers’ and customers’ extension options
- Denial of access and public utilities extension options
Scope of cover, limits and deductibles are determined by the insurer’s general and special conditions; the final scope is set out in the policy.
The Proxima Brokers approach
Using your financial statements, we agree the definition of gross profit and the sum insured with you, and recommend an indemnity period based on how long your operations would take to recover. We build a structure aligned with your property policy and compare terms and clauses. In a claim, we coordinate with the loss adjuster and insurer to support the preparation of the loss calculation.