Business Interruption Insurance, also known as loss of profits insurance, will provide cover you for loss of income should there be material damage to your property which prevents you from continuing to trade for a period of time.
For example, if a fire were to break out at your premises, in addition to a claim for material damage to the building itself and any equipment, you may also suffer a loss of income and incur additional costs. This might be from renting an alternative location to work from until your premises has been repaired, as well as covering revenue or profit you would have earned had the fire not occurred.
We would strongly recommend Business Interruption Insurance to all clients, and in particular those that rely on the premises they work from such as Post-Production Companies, Kit Hire Companies, Studios and Film Schools.
The cover would be arranged on either of the following bases:
- Gross Revenue – the revenue during the twelve months before the date of the loss or damage
- Gross Profit – the combined value of turnover, closing stock and work in progress, less, the combined value of opening stock and work in progress and Uninsured Working Expenses. The values of opening and closing stocks and work in progress will be calculated using Your usual accounting methods and made due provision for deprecation
- Increased Costs of Working – the costs necessarily and reasonably incurred by you as a result of the damage in order to keep your business running. The maximum amount payable during the first 3 months is 25% of the sum insured.
You should also consider the indemnity period required. This is the maximum period, starting when the loss or damage occurs, for which insurers will pay out under the insurance and during which period the financial results of your business are affected by the damage. It is important that this period is long enough to make sure that you can get back into the same trading position that you were in before the loss or damage.