3. Business Interruption

Question 1

What do we mean by BI?

Answer 1

BI relates to consequential loss of income as a result of property damage

Question 2

There are a number of elements that indicate the possibility of a BI claim, name some

Answer 2

1. Property loss is to commercial premises
2. The loss prevents production
3. Loss gives impressions to possible customers that they will not be able to trade
4. The loss prevents or restricts sales
5. Business has to close as result of incident
6. Potential customers are prevented from or put off approaching the business

Question 3

What to do when possible BI losses are identified?

Answer 3

• Assist business owner to minimise negative effect of property loss ASAP

Question 4

What proactive steps should be taken when BI losses are identified?

Answer 4

1.VERIFY BI policy in force
2. ASK what effects of loss will have on trading of business
3. VERIFY if advised no effect on trading
4. ASCERTAIN what steps can be taken to avoid or mitigate loss - policy usually covers this
5. WARN insurer and maintain appropriate reserve for potential BI loss
6. SPEAK with broker, can assist with avoidance or mitigation of loss
7. CONSIDER recommending a payment on account
8. LIAISE w chartered LA appointed to represent PH & insureds accountant or assessor.

Question 5

What is loss avoidance?

Answer 5

Claims team works with claimant to reduce loss

Question 6

What are the different types of BI cover?

Answer 6

1. Loss of Gross Profit
2. Loss of Revenue/Fees
3. Increase in Cost of Working
4. Denial of Access
5. Loss of Attraction

Question 7

What is loss of gross profit?

Answer 7

• Standard business (shop or factory)
• Indented to cover business against loss of GP
• GP should always be defined by the Insurer

Question 8

What is the rate of gross profit?

Answer 8

• The relationship between turnover & GP
• Calculation is GP/Turnover x 100 = %

Question 9

Loss of revenue/fees?

Answer 9

Usually dentist or accountancy practice

Question 10

Increased Cost of Working?

Answer 10

Cover for expenditure to avoid losses

Question 11

Denial of Access?

Answer 11

Where the premises cannot be reached and therefore trade cannot continue

Question 12

Loss of Attraction?

Answer 12

Where an event reduces customer demand as the customer is simply put off attending.

Question 13

What simple ways can the PH do to help mitigate their loss?

Answer 13

1. Displaying a sign “business open as usual.”
2. Advertising campaign
3. Outsourcing some of the work that would have been overtaken
4. Contact customers to advise of position to stop rumours which affects business rep
5. Intro of extended working hours or OT for staff or contractors