July/August Issue 62 - Flipbook - Page 37
NEWS
RENEWING YOUR BUSINESS INTERRUPTION INSURANCE
POST COVID-19
Business Interruption insurance
is a critical part of any insurance
policy – and yet so many
recovery operators find it difficult
to correctly insure their Gross
Profit to be certain it will give
them what they need in the event
of a serious loss.
This has been made even more
difficult with economic uncertainty
since March 2020. If your business
has been closed during lockdown,
even for part of the past 12 months,
then the chances are your turnover
and profit is nothing like you
predicted it would be at the start of
2020. So how do you respond when
your insurance provider asks what
your Gross Profit estimate is for the
next 12 months?
businesses fail within 18 months of •
suffering a major loss[1], so how can
you make sure this doesn’t happen
to you?
•
•
It’s easy during normal trading to
look back at the past 12 months, •
two years, three years and be able
to see trends. You’ll know what
business plans you have for the
year ahead and beyond. You’ll
know your normal level of staff
costs, work in progress and other
fixed expenditure you have as a
business. But how easy is it to see
this clearly at the moment?
Even despite the national Covid-19
vaccination programme and talk
of when lockdown may ease, it’s
difficult to see exactly when ‘normal’
trading will resume and when you •
will be seeing pre-lockdown levels
of recoveries and repairs. And
when you’re insuring your profit
or revenue, how can you set an
accurate figure?
Get your Business Interruption
insurance right and you’ll have the
peace of mind that your business will •
be well protected if the unthinkable
happens. But get it wrong and
your business could fail. In fact,
statistics report that almost 80% of
Avoid falling into the trap of
including the Covid-19 year in
your calculations and reducing
your sum insured – it’s not a true
reflection of your business and
is likely to result in you being
under-insured
Make sure your policy is
Declaration Linked.
This
applies an automatic increase
of 133.33% on top of the sum
insured – it not only gives you
the benefit of an uplifted sum
insured, but avoids average
being applied in the event of a
claim. (Average is a calculation
that insurers use when the sum
insured is lower than the actual
values at risk, and it results in
claims payments being reduced
proportionately to reflect that
shortfall)
Look at whether your policy is
adjustable – Many insurers will
have policies where they are
based on estimates which can
be adjusted at the end of the
policy period. This could result
in a return premium if your
actual figures are less than your
estimates
Make sure you set a long enough
indemnity period – 12 months is
rarely long enough, a minimum
of 24 months is recommended
•
Be realistic about savings your
business will make if it suffers a
loss
Make sure you are covered
for increased costs – this is an
important part of your cover that
gives you quick access to funds
to help your business at the
moment of crisis
Review your sum insured during
the year, especially if your
business starts to grow rapidly
when you re-open – don’t leave
this to renewal
At Aston Lark our team fully
understands the importance of
helping our clients to get this right.
We have the tools and the specialist
knowledge to help you and to make
sure your business is fully protected,
and ensure you have the funds to
get back on your feet quickly if you
have a claim.
To speak to us about your Business
Interruption insurance, contact your
dedicated AVRO insurance team:
Chris Chapman
chris.chapman@astonlark.com
T: 01732 386766
M: 07825 652829
Russell Winch
russell.winch@astonlark.com
T: 01732 386712
M: 07970 481416
[1]www.elitebusinessmagazine.co.uk
report on an NFU Mutual survey
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