Business Interruption & Crime
When you operate a Business, in the event of loss due to an insured peril, your business could also be subject to various types of business expenses and loss of income. These expenses are not automatically covered by the insurance policy, to protect against these losses you must purchase Business Interruption insurance. There are three main types of Business Interruption Insurance: Profits, Gross Earnings and Extra Expense.
Profits Business Interruption Insurance – covers the business’ loss of income until the business is back to the same Financial position as it was prior to the loss. The Indemnity period can be extended for longer periods, depending on the exposure of the business and how long it would take them to get back up and running and get back to the same profitability level. 12 months is the most usual, however, you can also purchase 18 month and 24 month Period of Indemnities. To obtain this coverage a Company needs to prepare a Profits Worksheet to determine the required limit of insurance. After a loss, if the adequate limit was not insured, there can be a co-insurance penalty applied to the loss. As this coverage is the most extensive, pays the longest and for highest amounts, it also follows therefore that it is the most expensive.
Gross Earnings Business Interruption Insurance – more economical than Profits coverage, Gross Earnings covers the business’ loss of income until the business is back up and running. Similar to the Profits coverage, the business must complete a Gross Earnings Worksheet to determine the limit to be insured – and if the proper limit was not insured, there can be a co-insurance penalty applied to the loss. This coverage is more the middle ground in both coverage and premium.
Extra Expense Business Interruption Insurance – Extra Expense Insurance only covers the expenses the company incurs to get back up and running and does not cover Loss of Income at all. This insurance typically has lower limits and, with its more limited coverage, Extra Expense also has the most reasonable premium.