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BUSINESS INTERRUPTION INSURANCE (WORKING OF SUM INSURED (Understand…
BUSINESS INTERRUPTION INSURANCE
DEFINITION
Major peril cover loss of income
cover loss of income that a business suffers after a disaster
SCOPE COVERAGE
Earnings of the insured business.
Provides cover for the financial losses due to an interruption to a business caused.
Direct loss, Indirect loss, Extra expense
BUSINESS INTERRUPTION COVERAGE
RENT OR LEASE PAYMENTS
REVENUE
RELOCATION
EMPLOYEE WAGES
TAXES
PURPOSE OF BUSINESS INTERRUPTION INSURANCE
Protect the insured against loss of income
Put the insured in the same financial position as if no loss had occured
BUSINESS INTERRUPTION CAN'T COVER
Utilities( Typical stopped)
income that isn't documented
losses from partial closures
losses from closures caused by non covered damage
INDEMNITY
Insured
Insurer
All insurance contracts are contracts of indemnity except life insurance
PERIOD OF INDEMNITY
Length of time for which benefits are payable under an insurance policy
Typical maximum indemnity period under a business interruption insurance
12 month
24 month
18 month
6 month
DIFFRENCE
BUSINESS INTERRUPTION INSURANCE
cover expenses cost
Indirect loss
PROPERTY POLICY
cover physical damage
direct loss
WORKING OF SUM INSURED
Understand client's needs & objective
underwriting considerations
type of policies and clauses
working of claim amount
what is not covered
rating factor
WHAT IS INSURED
GROSS PROFIT
standing of charges
net profit
increase in cost of working