A widespread problem
Around half of all businesses that experience a disaster won’t survive if they haven’t planned properly, according to the government. That’s why Business Interruption protection is so important. In our last blog we explained why you need it and how it works. But, even if you’ve picked up the phone to your insurance broker immediately, there is more you need to know.
Business interruption is a notoriously difficult area to understand and The Insurance Institute of London estimate that around 40% of policies are underinsured.
Establishing your ‘gross profit’
The problem arises due to misunderstandings of the term ‘gross profit’. The definition of ‘gross profit’ for insurance purposes differs significantly from an accountant’s understanding of the term. As a result, businesses frequently declare incorrect figures, resulting in underinsurance.
To make sure you have the right level of business interruption insurance, it’s essential to talk to a broker with experience in this field with access to the latest software, including business interruption calculators. They need to take a methodical approach to gross profit calculation.
Hopefully, you’ll never need to claim on your business interruption insurance, but if you do, you will want to know that it’s sufficient to keep your business trading.
More expert advice from CapitalSpace and Absolute Insurance Brokers :
Five steps to getting your risk assessments right
Protecting your business and your personal assets
Cyber risks: don’t under-estimate the impact
Business interruption: Is your business covered?
About Absolute Insurance Brokers
Established in 2009, award-winning Absolute Insurance Brokers work across a wide spectrum of industries and professional services, from start-ups to large nationals. Their specialist advice includes areas such as risk prevention and health and safety measures. Absolute’s philosophy as independent brokers is to provide complete peace of mind for their customers by understanding their businesses to develop the right type of insurance program to ensure their requirements are met. This approach, underpinned by first-class personal service, has underpinned Absolute’s growth, from a starting point of just 3 members of staff to more than 20 employees.
Steve recently joined Absolute Insurance Brokers with 29 years’ experience working for a global insurer, where he led a team of cross class underwriters handling all classes of general insurance. This has provided Steve with an unparalleled understanding of the risks businesses face and an insight into insurers’ approach to risk.
Prior to co-founding Absolute, Warren worked in the insurance industry as both a broker and underwriter for over 20 years. During this time, he undertook roles in both the London market and regional operations. This included working for a number of leading insurers and national brokers in both commercial underwriter roles and new corporate business development.
