Business Interruption Insurance


It is a common practice to insure your assets from accidental damages. But what if an accident at your factory or premises leaves you in a situation where you have to close the production for few weeks or months or the devastation of damages is such that it may take you months or years to reinstate and restart the production? What about the financial loss of production or turnover during this period?

Loss of Profit policy is an answer to protect financial loss arising out of business interruption due to fire and accidental risks. The policy is also known as Business Interruption Cover or Consequential loss policy. The policy covers for the gross profit lost during the period of reinstatement of the damages to the factory after adjusting for savings and sales during the period of loss. The policy also provides for additional expenses incurred to expedite production, or to maintain the sales, production is outsourced, lay-off or retrenchment expense, extension for failure of public utilities, auditors fees to prepare the claims and terrorism.

The policy follows the fortune of the fire and special perils policy and if the claim is not payable under the fire policy, the consequential loss policy does not trigger. The policy is suitable for hospitals, hotels, cinema halls, malls, amusement parks, clubs, health clubs, fitness centres, shops, small and medium enterprises, besides industrial units. Think of a situation that your business depends on one or few suppliers and an accident at his end renders you to halt or lower your production resulting into loss of profit. Conversely, similar situation happens at your one or few dependant customers. Would this policy cover such situation? Yes, this policy does cover such consequential losses also.