Business Interruption

Under the terms of the Policy, claims falling into this category arise as a direct result of destruction or damage to property, and are entertained only after liability under the material damage policy has been admitted or a claims settlement made.

The outcome of the Business Interruption claim in both financial magnitude and length of the period of interruption may be influenced substantially by the action taken immediately after the loss occurs, and as such, it is in everyone’s interest to take quick action to mitigate losses.

In the event of a Business Interruption loss, you should do the following:

  • Identify the areas of financial loss
  • Discuss with us the possibility of:
  • The use of alternative premises
  • Alternative source(s) of supply
  • Salvage sale
  • Any additional expense, which you feel if incurred will minimize the loss of your Gross Profit
  • Staff requirements in prevailing circumstances
  • Savings in standing charges, e.g. telephone, water, electricity, Internet.
  • Adjustments for trends and special circumstances affecting the business
  • Turnover achieved for the benefit of the business, other than on the premises
  • Set up separate books of accounts for recording extra expenses incurred to minimize loss
  • Establish with the Insurer/Adjuster the probable period of interruption
  • Record all trends or circumstances affecting the business during the interruption period
  • In attempting to continue trading, do not incur expenses over and above what the business will possibly have lost in Gross Profit

In establishing your statement of claim, it will be necessary to provide the following accounting information:

  • The turnover achieved in the interruption period
  • The turnover achieved in the similar period in the last financial year
  • Standing charges, as defined in the policy, taken from the last completed financial year
  • Total turnover for the last financial year
  • Wages

TIP: These requirements highlight the importance of careful pre-loss planning and information management, so that if and when a loss does occur, the required information can be easily obtained.