Business Interruption (or Loss of Profits) Insurance is a vital component of any business
continuity plan as it is the critical part of ‘who pays.’
Business Interruption insurance requires concentrated attention because it cannot be altered
after a disaster occurs.
Business Interruption Insurance is inextricably linked to property damage. Many aspects of
Business Interruption insurance replicate business continuity planning.
The key features of Business Interruption insurances are:
- The intention of BI insurance is to restore the business to the same financial position as if the loss had not occurred.
- BI insurers insist that any property is insured against loss or damage so that funds are provided to pay for the repair or replacement of the ‘bricks and mortar.’
The sources of revenue to be insured need to be identified and can be either gross income
rentals or revenue or fees or rates or other sources of income, or a combination.
Some income, such as interest on investments or profits on the sale of assets
are not insurable in normal BI insurances.
The business activities to be insured must be identified and need to capture all of the
organisation's business, including future acquisitions, or newly created entities or new ventures.