Business Interruption Insurance

Why do you need Business Interruption Insurance?

This cover is extremely important to the longevity of your business, without it you risk your livelihood should the worst happen.

Unfortunately this cover can be a little misunderstood, in fact some see this cover as a luxury, buying it when times are good, but dismissing it when things get a bit tight. Luxury it certainly isn’t, Business Interruption Insurance should be considered a necessity.

For the Sign Industry there are numerous ways to protect your business against loss of income following an insured loss. Much of this depends on how your business works and what you do.

What type of insurance cover do I need?

For most sign businesses there are two main ways of covering business interruption, the first being on a Gross Profit basis and the second is Increased Cost of Working (ICOW).

For many in the sign and graphics sector your business will probably be manufacturing, if so a Gross Profit basis would usually be the norm as you will predominently be premises based.

If you business is mainly installing but have business premises then Increased Cost of Working basis could be more applicable to your needs. This cover essentially gives you a pot of money to say move premises, cost to reinstate utilities for instance at alternative premises.

Business Interruption insurance covers the loss of your Gross Profit due to a reduction in your turnover following a loss at your business premises, caused by say fire, theft, storm, flood etc.

Indemnity Period

How long will an insurance company continue to pay?

This is commonly called an Indemnity Period. Its the length of time that your insurer would continue to pay, there are options for you to choose, a 12 month period is the minimum although a longer period should be considered.

You can choose between 12, 18, 24 and 36 months, but its essential that the period chosen is correct. Obtaining the right period is essential to get your business back on track and to its position before the claim arose within the period.

How do you get to the correct period of cover?

(1) There are many factors involved in this,
(2) How long will it take to rebuild the building you are in?
(3) Do you have specialist machinery that might take months to obtain?
(4) Is you business likely to come up against planning restrictions that could cause delays?
(5) How long would it take to get customers back if you lose them?

What is the worst that could happen and how long would it take to get you back to the same position as it was directly before a claim.

We would always suggest that a 24 month period is the starting point.

Indemnity Periods are very important and whilst 12 months may appear to be a long time, in reality rebuilding entire premises can take longer and then once you have you building back, your machinery installed, where have your customers gone?

What doesn’t Business Interruption Insurance cover?

It will NOT cover such things as customers who don’t pay or have gone out of business without paying you.

A scenario….

Your contracts can be overlooked. Consider this, you have a contract with XYZ Co to supply signs for their shops around the UK, you have been supplying them for some time and you are mid-contract when a fire occurs at the premises (this may be out of your control and has started in a neighboring unit and spread to your premises).

Supplying your customer suddenly grinds to a halt – the result is an instant reduction in turnover and what’s even worse, despite your very good relationship with your customer, they can’t wait for you to be up and running again! The result is that they have to move their business to another company and, of course, there will be a queue just waiting to take it from you.

Multiply this scenario by the amount of contracts that you have, whilst this may apply more to the larger business even a single contract lost in a small business can be devastating

Signelite Business Interruption Insurance

What’s best for your business? When you contact us to discuss your Business Insurance requirements we can look at the best option that suits you and your business.

The Signelite insurance policy covering business interruption provides an indemnity limit of 24 months as standard.

At SignElite we are proud of the fact that we have been the appointed ISA-UK – Insurance broker for many years providing insurance to the Association itself as well as many of their members, in fact well over 100 of them.

With Signelite  “Your Covered”

Contact our specialist team on 01623 397300