Terminology

What is a business interruption insurance cover?

Interruption insurance is a type of insurance which protects companies from the loss of profits they may suffer as a result of a material loss.

Unlike property insurance (real estate or content), which only covers material damages, business interruption insurance exists to cover the income that a business would have in the event that the loss had not occurred. For businesses that have been damaged by fire, flood or other events, business interruption insurance makes the difference between a long-term business recovery and a financial collapse.

It is important to know that property insurance does not cover financial losses resulting from property damage and therefore need to make provisions for  of additional business interruption coverage or even an additional contract for business interruption insurance.

FAIR Consulting  can check whether your business is adequately insured both for the restoration of material damages to the business property and for the loss of profits that may arise as a result of the material damage.

Which company needs business interruption insurance?

There are several factors that determine whether a business needs business interruption insurance or not. However, the most important factor is whether a significant loss of real estate or other material assets may affect the ability of the business to continue producing and trading its products for the period of time required for the business to return to its pre-loss operation. condition.

A company that can not operate in an alternative, temporary space or that needs stock inventory or machinery to operate is more exposed to loss of profits in the event of loss or destruction of its assets. 

Therefore, if the business or the entrepreneur estimates that the risk of significant material damage may significantly affect the viability of the business, then they should add insurance coverage for loss of profits in order to protect themselves.

Most important of all, it has been observed that the payment of insurance compensations is significantly accelerated by the activation of business interruption contracts in parallel with the property contracts.

What is the period for which compensation is paid for the interruption of operations of a company?

This period is the period for which the company's gross profits are covered by the business interruption insurance policy. This period starts from the date of the loss and ends depending on the maximum period specified in the insurance policy (usually 12, 18, 24 or even 36 months).

In order to set the maximum period, the company needs to estimate the maximum time it will require to restore its full and independent operation, ie how long it takes to restore the buildings, to replenish the damaged stocks and machinery.

FAIR Consulting can prove to be a valuable partner and ally in case you need to make a claim for business interruption insurance. It can accurately calculate the loss of profits resulting from your material loss. It documents the claim and negotiates the final compensation quickly and efficiently. The calculation of the loss of profits should be based on business forecasts, in addition to the profits of previous years. This takes into account factors such as seasonal fluctuations and long-term business moves. Due to their complexity, these calculations are often time consuming. Therefore, working with a qualified technical consultant who coordinates your actions allows the company to focus its efforts on restoring its operation as quickly as possible, in the most efficient way.