 The Business Interruption policy covers the Loss of Gross
Profit sustained by an organisation due to reduction in
turnover following a loss or damage because of the operation
of an insured event /peril.
Worse than the loss due to the risk of fire and the damages
it may cause as a result, is to be unable to continue doing
business after the break of the fire. Although the business
stops due to this calamity, there are certain standing
charges that will independently continue irrespective of the
situation that the insured is placed in. These expenses such
as bank interests, employee's salaries, rent, electricity
and other standing charges will still need attention in
addition to the loss of revenue. This results in a loss of
gross profits due to reduction in turn over and increased
cost of working during the period of interruption. Here you
will be able to seek information and request for
quotation on line.
For Business Interruption cover to operate it is compulsory
that there be in place a Property All Risks or Fire
Insurance Policy. This cover takes into consideration the
following aspects which should be addressed when opting for
this cover, as follows:-
 Gross
Profit
Net Profit
Standing
Charges
Annual
Turnover
Limit and
Period of Indemnity
There are Two type of Deductibles (Monetary and Time)
applicable under the Business Interruption insurance for
each and every loss in addition to a number of other
Conditions.
Based on the nature of ones' business this cover can be
tailored and extended to cover customers' premises,
supplier's premises etc.
DEFINITIONS :
Gross Profit
The amount by which the sum of the value of the turnover and
the value of the closing stock exceed the sum of the value
of the opening stock and the amount of the specified working
expenses. The values of the opening and losing stocks shall
be arrived at in accordance with the Insured's normal
accountancy methods, due provision being made for
depreciation.
Net Profit
The Net Trading Profit (exclusive of all Capital receipts
and accretions and all outlay properly chargeable to
Capital) resulting from the business of the Insured at the
premises after due provision has been made for all standing
and other charges including depreciation.
Standing
Charges
Interest, Rent, Bank Charges, Insurance Premium,
Advertising, Printing, Stationery, Electricity, Travelling
Expenses, Maintenance of Plant and Machinery, Depreciation
of Building, Plant and Motor Vehicles etc.
Annual
Turnover
The Money paid or payable to the Insured for goods sold and
delivered and for services rendered in course of the
business at the premises.
Limit and
Period of Indemnity
Whilst the period of insurance is 12 months, the indemnity
period differs. This would depend on the period the insured
would necessary prepare to come back to the position they
were before the loss in terms of both property and trading.
Reasonably the periods would be anything between six to
eighteen months. The limit also would differ. However, it
would basically be worked out based on the Indemnity amount
payable by the insurers which will be in respect of :
a) Reduction in Turnover
b) Increase in cost of working
The rate chargeable is always applied on "Per Mille" basis
(for every thousand units) on the Total Sum Insured (Turn
Over) and is very dependant to the limit and period of
indemnity, nature of risk, location and the housekeeping.
There are both time and monetary Deductible for each and
every loss in addition to a number of other Conditions |
