Business interruption insurance is one of the more important insurance covers for a business, because having it could mean the difference between your business surviving or not.
Commercial property insurance ensures that your building will be covered in the event of damage by any peril, and compensates you for the cost of restoring the building and restocking it to the pre-claim position.
However many commercial properties are used to generate revenue either from a trading business or as a rental property. A property / business owner might find that income may reduce or stop completely, with customers going elsewhere and some not returning. Business interruption insurance covers the loss of potential earnings.
Business Interruption cover is rated on a business’s Gross Profit level and covers against the loss of this gross profit due to a damage from any peril covered.
Even if a business can get operating very quickly from another premises on a short-term basis there are often a myriad of extra costs (extra rent, moving of stock, hire of business equipment etc) to be borne by the policy holder. The Increased Cost of Working (ICOW) section of this cover compensates for these extra costs.
The importance of having the right cover and business interruption this cover was well illustrated in the recent case of C&D pet foods whose premises were destroyed by fire as reported in the Irish Times (April 9th 2010). Filings show the group received €8.6 million in fire insurance and €5.3 million in business interruption insurance as a result of the 2006 fire. This meant the business posted a profit for this period instead of a substantial loss.
This cover is very important, as few businesses could afford to shut down completely for a prolonged period of months and hope to remain in business – businesses need to trade in order to stay in existence. It is important that the amount of cover you require is adequate to ensure complete, rather than partial, recovery from the disaster.
At Doyle Mahon Insurances we understand the importance of having the right cover in place at the right price. If you would like to discuss your level of cover or obtain a competitive quote for your insurance call our offices at 053 91 23630 or request a call here.