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Business Interruption

Loss of gross profit and increased cost of working while the business is unable to trade after property damage that is itself covered.

Also calledFire Loss of Profit · FLOP · Consequential Loss

File/Claims library/Property and engineering/Lost income and interruption

First thing, todayStart the record of lost production and lost orders on day one. It cannot be reconstructed convincingly later.

Three deadlines
  • Tell the insurer now, not after the assessment.
  • Start the figures on day one the period of indemnity runs from the loss, not from when somebody got to it.
  • Every document within the time the insurer asks for it.
A factory at a standstill, the gate chained
A factory at a standstill, the gate chained. An illustration.

When you would claim

  • Production stopped or reduced after a covered property loss
  • Premises unusable while reinstatement is carried out
  • Extra cost incurred to keep trading, such as hired plant or outsourced work
  • A supplier or customer's premises damaged, where extended

What insurers most often rely on

  • The underlying material damage claim not admitted, which usually takes this with it
  • An indemnity period too short to cover the actual outage
  • Gross profit under-declared, so average applies here as well
  • Losses reconstructed after the event rather than recorded as they arose

Every one of those is answerable, and several are decided by what was done in the first two days rather than by anything argued later.

The documents

most of it exists already

10 items, and most of them exist somewhere in your own office already. Assemble them once and properly; a file sent in pieces takes three times as long to settle.

  • Claim form and the material damage claim it follows
  • Audited accounts for the previous years
  • Monthly turnover, production and despatch figures either side of the loss
  • Order book, and evidence of orders lost or delayed
  • Payroll and standing charge records for the indemnity period
  • Invoices for increased cost of working
  • The auditor's or accountant's working of the loss
  • Cancelled cheque and bank details in the insured's name, for the NEFT payment
  • Details of any other insurance covering the same risk
  • The gross profit working: turnover before and after, the standing charges that carried on, and the dates you were actually down
The timelineWhatever else you send, send a one-page timeline: loss, intimation, survey, documents sent, offer. More claims turn on the sequence of dates than on any single document.

Next

Fire Claim: The First 72 Hours, and what it shares with this

An interruption claim rides on the damage claim underneath it, so start with the playbook for what was damaged. Then put a date on the day production stopped and a date on the day it resumed, because the gap between them is the claim.

Call 92514 56334

Check the indemnity period

Two things cap this and neither is the building. The gross profit you declared, which is averaged the same way a sum insured is, and the indemnity period, which is routinely set at twelve months because twelve months is the default.

Filed under: Property and engineering · Lost income and interruption

Claims that sit next to this one

the same premises, or the same event

Fire and Special Perils

the damage this cover waits on

Machinery Loss of Profit

the same idea, driven by a breakdown

Deterioration of Stock

stock that spoils while you are down

Production stopped and the losses still running? Report a loss or call 92514 56334.