Considerations when insuring for Business Interruption

Overview:

Business Interruption (BI) cover is primarily purchased by a business or group to reimburse the policyholder for a loss of gross profit (and occasionally gross revenue) caused by a covered peril. It will also provide cover for certain additional costs that are incurred specifically to mitigate these gross profit/revenue losses.

The settlement for Business Interruption claims may not always provide an adequate coverage to the policyholder. This can be for many reasons such as an inadequate sum insured, miscalculation/ misunderstanding of the rate of gross profit or an insufficient period of indemnity.

Situations where a Business Interruption policy does not provide adequate coverage to the policyholder can result in undesirable consequences to all stakeholders including the policyholder, insurer and broker. A policyholder may not be fully reimbursed for its true losses; an insurer may be charging insufficient premium where sums insured are under-declared; the relationship between policyholders and insurer can deteriorate; brokers may be exposed to Professional Indemnity claims against them if the policyholder feels that the fault was not theirs.

Although tailored towards insurance brokers and placement, this presentation will be of benefit to anyone involved with business interruption policies and claims.

Learning objectives

• By attending this event, delegates will be able to identify:
• the various items and cover within a Business Interruption policy wording
• how to mitigate the risks of underinsurance
• the economic limits of Increased Cost of Working
• the benefits of Additional ICOW

Speaker biography: Rajen Rajput, Senior Accountant, Matson, Driscoll & Damico UK LLP

Rajen Rajput has a numerical and technological background and has 10 years’ experience in the insurance industry. He immediately began to specialise in Business Interruption claims and spent eight years representing policyholders before moving to MDD as a forensic accountant.

Rajen has gained experience and knowledge from understanding claims from both a policyholder’s viewpoint and an insurer’s. Rajen’s involvement in multi-million pound claims in addition to participation with smaller cases, positions him well in understanding and quantifying the BI insurance needs for small businesses as well as large corporations.