The policy covers the cost of overheads and the loss of profits arising from damage such as floods, fire and allied perils including earthquake, riot, strike and civil commotion.
The business interruption covers the consequence of fire and is taken in conjunction with the material damage cover, hence the perils covered are the same.
The purpose of the business interruption insurance is to:
Replace the income lost due to interruption of the business by an insured peril.
Reimburse those charges which continue regardless of the reduction in turnover.
Pay net profit which would otherwise have been earned
Meet additional costs which may be incurred to enable the business to recover more quickly or to reduce the loss. Examples of such costs are cost of provisional repairs, installation of temporary machinery and cost of alternative premises.
Indemnity period = 12 months
This cover provides for protection on:
Loss of profits
Loss of revenue
Loss of rental income
Wages or salaries
Increased cost of working due to business interruption.