When you buy your policy, you will also need to decide the maximum length of time (the indemnity period). This is the time it will take you to get your business back up and running to the same trading position you were at prior to any loss, should you suffer an interruption due to an insured event. You will need to consider the worst possible damage or disaster that the business could incur and estimate how long it will take to repair or replace buildings, machinery and stock and determine the length of time it will take to recover your customers and market share. Typical indemnity periods range from between 12 to 36 months.
For example, if you suffer a fire loss that damages the majority of your premises, ask yourself how long it would take for you to return to your normal trading levels once the building is fully repaired and safe to reopen? This will include the time it will take not only for the actual repairs but planning permission requests/proposals, professional services and surveys, sourcing of equipment and materials and the like.
To ensure that you do not underestimate the indemnity period it’s important that you identify the vulnerable areas within the business, consider the likelihood of them being faced with an interruption due to an insured event and the amount of time it would take to return back to normal.