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BUSINESS INTERRUPTION INSURANCE (COVERAGE (relocation- temporary location,…
BUSINESS INTERRUPTION INSURANCE
SCOPE OF COVER
provides cover for the financial losses due an interruption to a business caused by damage property
To protect the prospective earnings of the insured business
COVERAGE
relocation- temporary location
employee wages- make payroll
taxes- required tax
revenue- income earned during period
rent/lease payments- continue payment
CANNOT COVER
utilities - typically stopped
income that isn't documented- important to document
losses from partial closures
losses from closures by non-covered damages
ASCERTAINMENT OF LIABILITY
a liability is said to be ascertained liability if it is determined/ fixed/ imposed under some contract, law/other such act
UNASCERTAINMENT OF LIABILITY
liability which is not determined/fixed and a provision is created for such anticipated liability then it is to be added to net profit.
PURPOSE
protect the insured against loss of income
put the insured in the same financial position as if no loss had occurred
INDEMNITY
a contract by which party promises to save the other from loss caused to him by the conduct of the promisor himself/ by the conduct of any other person, is called as contract of indemnity
MAXIMUM INDEMNITY PERIODS
MINIMUM: 3 month
MAXIMUM: 3 years
DEFINITION
also known as business income insurance
a type of insurance that cover the loss of income that a business suffers after a disaster. the income loss covered may be due to disaster-related closing of the business facility/due to the rebuilding process after a disaster
DIFFERENCE BETWEEN PROPERTY POLICY& BUSINESS INTERRUPTION INSURANCE
PROPERTY POLICY(FIRE)
direct loss
cover physical damage
BUSINESS INTERRUPTION INSURANCE
indirect loss
cover expenses cost