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BUSINESS INTERRUPTION INSURANCE (working of sum insured (understand…
BUSINESS INTERRUPTION INSURANCE
definition: a type of insurance that covers the loss of income that a business suffers after a disaster.
DIFFERENCE BETWEEN PROPERTY POLICY AND BUSINESS INTERRUPTION INSURANCE
property policy(fire)- cover physical damage, direct loss
BI( fire consequential loss) - cover expenses cost, indirect loss
SCOPE AND PURPOSE OF BUSINESS INTERRUPTION INSURANCE
PURPOSE: to protect the insured against loss of income and put the insured in the same financial position as if no loss had occured
SCOPE OF COVERAGE: to protect the prospective earnings of the insured business
business interruption coverage
revenue, rent or lease payment, relocation, employee wages, taxes
business interruption insurance cant cover
utilities, income that is not documented, losses from partial disclosures, losses from closures caused by non-covered damages.
INDEMNITY
indemnity holder : the person who loss is to be made good
indemnifier: the person who promises to save the other from loss
PERIOD OF INDEMNITY
the length of time for which benefits are payable under an insurance policy
right of indemnity holder
all damages which he may be compelled to pay in any sued in respect of any matter to which the promise to indemnify applies
all cost which he may be compelled to pay in defending such sued provided he acted prudently or with the authority of the indemnifier
typical maximum indemnity periods under business interruption insurance policies
periods of 6 month, 12 month, 18 month, 24 months
working of sum insured
understand client's needs and obj
underwriting considerations
type of policies and clauses
working and claim amount
what is not covered
rating factors
what is insured
gross profit: standing of charges, net profit. increase in cost of working
ascertainment of liability: said to be ascertained liability if it is determined or fixed or imposed under some contract, law or other such act
unascertainment liability: which is not determined/ fixed and a provision is created for such anticipated liability then it is to be added to net profit.
rating factors
the premium is calculated by applying a rate to the gross profit sums insured