If your business is flooded, damaged by a fire or a major theft happens, you may not be able to trade. While your property insurance covers you for loss and/or damage to your business premises and its contents, business interruption covers you for the loss of profit while you deal with the aftermath of an event, until your trading is back to where it should have been had the disaster not taken place.

What is business interruption insurance?

Business interruption insurance provides cover for either additional expenses or loss of profit if you are unable to trade following an insured event.

Business interruption insurance will not only cover you for loss of income while your business recovers, but providing that your sum insured is adequate, it will take into account growth in income that might have happened had the disaster not occurred.

What is my sum insured?

When you buy your policy, you will need to decide the maximum length of time that an interruption to your business might last should you need to make a claim.

For example, if you’re a hotel business and pipes were to burst after freezing weather, ask yourself how long it would take for you to return to normal trading levels after all your rooms were damaged by escaped water? This, along with your forecast of the profit you would have earned, based on your financial records, will determine the maximum amount that you are covered for – known as the ‘sum insured’.

What happens if I have to move premises as a result of an incident?

Your business interruption policy is designed to reinstate any lost profit as a result of the incident, so that you’re returned to the trading position you would have been in had it not happened. So if your business needs to move to temporary business accommodation to keep going, your insurance will cover you for things like the additional rent, staff overtime to help you move, and advertising to let your customers know where you are (amongst others).

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