This policy covers loss of gross profits or revenue as the case may be resulting due to a reduction in the turnover following a loss under the material damage policy (Fire or Property All Risk policy). There are four critical elements to business interruption insurance:
The policy normally has a time excess which means that the revenue loss for the first few days ( time excess ) is not covered.
Coverage commences specifically, after the waiting period expires, coverage is provided for lost net income, temporary relocation expenses (designed to reduce overall costs), and ongoing expenses such as payroll that enables businesses to continue paying employees rather than laying them off.Business Interruption Insurance
The policy pays for loss of Gross Profits for the duration of the interruption subject to the indemnity period chosen by the insured while purchasing the policy. The indemnity period should be prudently selected and should reflect the maximum time for the business to come back to normalcy after a major loss.
This insurance provides vital protection when a business falls victim to circumstances outside of its control. The purpose of this coverage is to protect the business against losses arising from its inability to continue normal operations, and its inability to occupy its premises.