The business interruption insurance: the life insurance of your company

If you have to shut down your production due to an incident it could have serious impact on your business. Think of a fire, machine failure, cybercrime, terrorism, food contamination, ... For specific risks like fire, there is fire insurance. Unfortunately, this is not enough. Fire insurance covers the financial consequences of the material damage caused by a fire, but what about the consequences for your company in the longer term? Over 60% of companies that don’t have a business interruption insurance, do not survive an incident. You need to make extra costs and continue to pay fixed costs while you might have to interrupt your activities, or your sales decline.

In order to reduce the risks of a breakdown of business activities or a high cost impact on your financial situation, there is the business interruption insurance. This ensures that the impact of a damage case on your company's health is limited. In case of a loss, the continuity of your company is being tested on a financial, commercial, social and organisational level. The business interruption insurance covers the permanent fixed costs, operating income and costs that result from your actions to reduce the damage: outsourcing, temporary rental of premises, extra hours worked, ...

But which amount should you insure? It is important that you make a correct and accurate estimate based on the latest available annual accounts. Did you know that:

• You should make a forecast of the budgets of the current year and the coming year?
• You should calculate the insured amount on an annual basis?
• You can adjust the amount insured in both directions during the year? This will allow you to absorb a sudden increase in sales or avoid paying too much premium if sales fall sharply.
• If you do not submit the figures in time, the adaptability clause is not valid in case of a loss and the proportionality rule can be applied?
• It is best to take out the fire and business interruption insurance with the same insurer?

If you are covered for business damage, we will send you a letter each year to request your figures. ADD can help you make a correct estimate of the amount to be insured.

Business interruption insurance is customised; let us share thoughts on the risks to be insured. This allows you to safeguard your company's survival after a damage case. Contact us for more information or to see what opportunities are available to expand the business interruption policy.