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BUSINESS INTERRUPTION INSURANCE (Business Interruption Coverage (Revenue,…
BUSINESS INTERRUPTION INSURANCE
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 occurred.
(Also known as business income insurance) is a type of insurance that covers the loss of income that a business suffers after a disaster.
Scope of cover
Provides cover for the financial losses due to an interruption to a business caused by damage to property.
To protect the prospective earnings of the insured business.
Business Interruption Coverage
Revenue
Rent or lease payments
Employee wages
Relocation
Taxes
Business Interruption Insurance Can't Cover
Utilities
Income that isn't documented
Losses from partial closures
Losses from closures caused by non-covered damages
Indemnity
Two parties-Indemnity holder and Indemnifier.
All insurance contracts are contracts of indemnity except life insurance
Factors to consider
Actual experience of the business before the loss
Expected experience of the business after the loss
Actual experience of the business after the loss –Mitigation
Reasonableness of repair period -“due diligence and dispatch”
The factors of the differentation of business and claim
Rebuilding
Business Contents and Machinery
Rebuilding of Customer Base
Indemnity period on a business interruption policy
maximum length of time specified in months
policy will support the business following an insured event causing an interruption to the business
Typical maximum indemnity periods under business interruption insurance policies
standard limit written into a policy, especially a package policy
6 month
18 month
24 month