Business Interruption - The Importance of Adequate Indemnity Periods

At SSR, we understand that a commercial insurance policyholder should consider purchasing Business Interruption (BI) coverage with an indemnity period longer than 12 months, for several reasons:

 

1. Extended Recovery Time: A longer indemnity period allows extended recovery time in the event of an insured loss. Businesses may experience disruptions that require an extended period to resume normal business operations.

Our Business Interruption section can accommodate 12 month, 18 month, 24 month, 36 month, or 48 month indemnity periods of cover.

 

2. Complex Business Interruptions: Some disruptions to business operations may have long-lasting effects, even after the initial incident is resolved - for example, rebuilding a damaged property, reestablishing supply chains, or retraining staff.

 

3. Dependency on Suppliers and Customers: Businesses often rely on a network of suppliers and partners and key customers. If a key supplier or customer is affected by an insured loss, it may take a long time to find alternative suppliers and restore the original supply chain or source new customers.

As standard, we include business interruption to our insured’s suppliers and storage sites (unspecified) to 10% of the sum insured, which can be increased on request.

In addition, we include business interruption to our insured’s customers (unspecified) to £100,000 or 10% of the sum insured (whichever the greater) as standard, which can be increased on request.

 

4. Regulatory Delays: In certain industries, regulatory approvals or compliance issues can cause delays to the recommencement of business activities.

 

5. Market Competition: Business Interruption insurance can be a differentiator in a competitive market. Having a longer indemnity period demonstrates a commitment to business continuity and risk management. It can enhance the business's ability to recover and maintain customer confidence during extended disruptions. Our cover can include additional increased cost of working i.e. costs incurred by the insured that are not “economic” Increased Cost of Working.

 

6. Loan Repayment: If a business has outstanding loans, a longer indemnity period helps ensure that the company can meet its financial obligations, including loan repayments, during a prolonged interruption. This prevents additional financial strain on the business. Our cover includes outstanding debit balances (£150,000) as standard.

 

7. Peace of Mind: Policyholders can have peace of mind knowing that they have adequate financial protection for an extended period, reducing uncertainty and allowing them to focus on the recovery process without the added financial pressure.

An extended indemnity period beyond 12 months provides financial support during this extended downtime, ensures coverage during the entire recovery process, provides the necessary financial support during this transition, accounts for potential delays related to regulatory processes and ensures continuous financial support.

 

SSR can provide indemnity for the following losses, costs and expenses:

• insurable gross profit/estimated insurable gross profit or gross revenue/estimated gross revenue;
• rent receivable
• increased cost of working
• additional increased cost of working i.e. costs incurred by the insured that are not “economic” Increased Cost of Working
• outstanding debit balances (£150,000 as standard)

 

Automatic Extensions include:

• Notifiable disease, murder or suicide, food or drinking poisoning, vermin or pests at the premises resulting in restrictions on the use of the premises on the order or advice of a Local or Government Authority (£100,000)
• Prevention of access to the premises (£100,000)
• Contract sites and exhibition sites (to the limit insured under Gross Profit / Gross Revenue / ICOW - whichever is greater)
• Damage to UK customers’ premises (£100,000 or 10% of sum insured, whichever the greater)
• Damage to UK suppliers’ premises (10% of sum insured)
• Public utilities extension including telecommunications (£100,000)

 

Territorial limits of cover apply only to: Great Britain, Northern Ireland, the Channel Islands and the Isle of Man.

Please refer to our scheme-specific summary of cover for further details, our suite of cover summaries can be found here.

When considering Business Interruption coverage, it's crucial for commercial insurance clients to carefully assess their business operations, potential risks, and the specific needs of their industry to determine the appropriate indemnity period for their policy. Consulting with insurance professionals can help tailor coverage to the unique circumstances of the business.