Modern business is full of risk. There’s no escaping it. But it is possible to mitigate against. You cover your assets and your people against such risks, but what about your income? Business interruption insurance lets you do just that.
Essentially, business interruption insurance – also known as business continuity insurance – is a type of cover that protects, or rather replaces, lost income that occurs as a result of an interruption. That interruption could be a fire or flood, or any other natural disaster that causes material damage which impacts your ability to trade. To be clear, business interruption insurance does not cover the damage to your property, but rather the profits lost due to that damage. Many policies will also cover you for any additional costs that may arise as a result of such an incident – such as renting alternative premises.
Business interruption insurance is not usually sold as a standalone policy but rather as an add-on to another comprehensive business or property insurance. In these instances, the level of business continuity cover often mirrors that of the main policy. For example, if you are not covered for flood damage in your property policy then you likely won’t be in covered for interruptions caused by flooding.
Business interruption insurance is not usually sold as a standalone policy but rather as an add-on to another comprehensive business or property insurance.
What does business continuity insurance cover?
So that’s business interruption insurance explained – but what does it cover?
The exact level of cover offered will differ from policy to policy. However, most comprehensive cover should insure you for:
Loss of profits: This is calculated based on previous earnings. Any profits you would have made during the period of interruption will be replaced.
Out of pocket costs: This includes any fixed costs that you still have to pay despite being unable to trade, such as loan repayments, as well as additional costs caused by the interruption, such as renting temporary premises.
Re-training costs: Should you be required to replace equipment or machinery and retrain personnel on how to use it, these costs will also be covered.
Employee wages: If you wish to retain staff during a period of non-trading, you will need to pay them. Business continuity insurance covers you for this.
Taxes: Should you need to pay taxes while unable to trade due to an interruption, business continuity insurance will usually cover this.
As with most cover, business interruption insurance policies usually feature certain exclusions – loss of utilities is often not covered for example. That’s why it is important to discuss your specific needs with a trusted broker who can find the perfect policy for you.
Do I need business interruption insurance?
For most businesses, the answer to this question is yes. Were your business unable to trade for even a small period of time, ask yourself, could you cover the potential loss in profits? Even if you could, would you want to? Could your business absorb any loss and move on unhindered? In the case of most SMEs, the answer to this latter question in particular is no.
If an interruption to trading would jeapordise the profitability or survival of your business, then yes, you need a business interruption policy – and should speak to your broker about it today.
Why choose Lifecare?
At Lifecare, we know that life and business are full of risks. But while a business continuity policy won’t protect you from unexpected events, it will protect you from financial loss. We’ll help you choose the types of risks you wish to cover, by choosing the right kind of policy, and with the benefits you most need, for total peace of mind.
Our highly experienced Dubai-based team can assist you with any issue related to a claim as a result of an array of business interruptions. And we are fully committed to making sure your experience with us is as timely and hassle-free as possible – that’s why we’ll always prioritise the needs of your business and any affected staff.
As well as finding you the best price from hundreds of the best insurers, we also offer a unique and personalised service to bring you cover that counts, at a premium you’re prepared to pay. We’re on hand in the difficult times too, managing the entire claim process for every one of our clients.
So, why choose Lifecare for your business continuity insurance? Quite simply, because we’re not like the rest. Our team of over 100 insurance professionals look after individuals, families and companies, and make us the leading independent insurance agents in the region. In the 20 years since our launch, we’re proud to have helped over 25,000 people and more than 1,000 businesses.