What is Fire Loss of Profits (Business Interruption) Insurance
A major accident at a business premises cannot only destroy the assets but also bring the business to a standstill, leading to loss of gross profit. Depending on the size and nature of business, it can be several months before the business can get back on track. This is usually a period of great financial stress for businesses, as fixed expenses such as rent, remuneration of employees, etc. continue to accrue regardless of the extent of damage and production loss.
Consequential losses to the insured business are specifically excluded under a standard Fire and Special Perils Insurance policy that covers only physical damage to the assets. This is where a Loss of Profit Insurance policy is useful, as it covers the loss of Gross Profit of a business arising from an insured loss under its Fire policy.
What’s coveredThe policy covers loss of:
Net Profit + Standing Charges + Expenses incurred necessarily and reasonably to bring the business back on track
A Loss of Profit Policies may carry an excess / deductible expressed in number of days. This indicates the days immediately after the loss, which would not be included while computing the reduction in Gross Profit.
What’s not coveredThis policy does not provide coverage for:
- Loss of gross profit due to a peril not covered under the Fire policy
- Difference between the value of stock at the time of fire and at the time of subsequent replacement
- Deterioration of undamaged stock after fire
- Cost of documentation for Fire and Loss of Profits claim
- Loss of goodwill
- Third party claims
- Other exclusions stated on the policy
What’s optionalThe policy can be extended to cover:
- Accidental failure of public electricity / gas / water supply
- Damage to customer’s premises due to perils covered under Fire Policy
- Damage to Supplier’s premises due to perils covered under Fire Policy
- Auditor’s fees
- Lay –off and/ or retrenchment Compensation with or without Notice Wages Liability
Other types of insurance cover
You will need contents insurance, sometimes known as all risk cover, for items for which you require cover out with the home. Please provide details of these items at the time of quotation to ensure that the policy provided meets with your requirements.
Accidental Damage cover provides protection against costs incurred through damage that you, your family members or visitors may cause to the structure of your Building or to your Contents. Examples of incidents which would be covered under this extension include putting your foot through the loft floor damaging the ceiling below, leaving a tap running leading to water damage or carpet spillages. Such incidents would not be included under a policy taken out to cover Standard Perils only.
Additional charges will apply and in certain circumstances this cover might not be available.
Items kept in the garage or garden sheds will be covered under the Contents section of your policy provided you have included their value in the total sum insured declared. Limits may apply to the amount that can be claimed for theft of items taken from outbuildings and additional charges may be made for certain items such as ride on mowers. Cover for motor vehicles and motorcycles is excluded. Please declare your requirements for cover kept in outbuildings at the time of quotation to ensure that the policy provided meets with your requirements.
In most cases you will need to arrange cover for your own contents and personal possessions. Please refer to your tenancy agreement to check what, if any cover is provided by your landlord.
An excess is the amount a policyholder is required to pay towards the cost of any claim. You may be asked to pay this amount to a company that has carried out repairs on behalf of your insurer, or alternatively the sum will be deducted from any settlement received.
- Ensure you declare a list of items to be insured under contents insurance including serial numbers, model, make and have the correct sum insured
- Always keep valuables safely and locked out of site to protect against the risk of theft