Business Interruption Insurance & Claims: Questions & Answers

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Chapter 12

Q12. 1

‘Package’ policies are designed to insure businesses with an insured value of up to $2 million. Over that, it is standard practice to insure the property and business interruption risks under an ISR policy.



Q12. 2

There is little or no difference between Business Pack policies.



Q12. 3

There is no easy way to keep abreast of all the various Business Pack policies available in the Australian or New Zealand markets. It is just a matter of hard work for Insureds and insurance advisers to read and update comparison charts of insurance policies.



Q12. 4

Besides providing comparisons of general insurance products, PolicyComparison.com provides which of the following services?









Q12. 5

All Business Pack policies keep it simple, and require the Sum Insured for Insurable Gross Profit (or its comparable term) to be based on ‘Sales less Purchases’.



Q12. 6

Where a Business Pack policy states that Insurable Gross Profit (or its comparable term) is ‘Sales less Purchases’, there is no need to make any adjustment for opening and closing stock.



Q12. 7

If an ISR policy or a Business Pack policy allows the Insured to deduct those expenses that they do not wish to insure, to arrive at the Sum Insured/Declared Value, then it is necessary to list the expense or expenses not insured (using the same terminology as in the Insured’s accounts) in order to avoid the Insured being penalised for under-insurance.



Q12. 8

The Weekly Benefit cover provided by most Business Pack policies is best only used on very small SME businesses.



Q12. 9

With a Business Pack policy, there is no need to read and understand it, as it is designed to fully protect the SME.



Q12. 10

Additional Increased Cost of Working cover is all that most professional practices and office risks require.



Q12. 11

All Business Pack policies provide adequate cover for Claims Preparation, covering the preparation of claims under all sections of the Business Pack policy.



Q12. 12

If only Additional Increased Cost of Working cover is required, it needs to be high enough to cover all the additional costs likely to be incurred if the building that the Insured occupies is severely damaged and they need to relocate.



Q12. 13

Preparing a Business Continuity Plan is arguably the best way to arrive at an adequate Additional Increased Cost of Working sub-limit.



Q12. 14

In all Business Pack policies, it is a requirement that at the end of each accounting period (normally monthly), a business stores a full list of their financial accounts with their accountant or auditor, or at alternative premises. This should include a detailed accounts receivable ledger (customer by customer). These records should be left with the accountant, auditor or at the alternative premises, for at least 12 months.



Q12. 15

As Claims Preparation is a standard cover under all Business Pack policies, there is no need to increase the standard cover.



Q12. 16

Where the tenant and landlord are separate legal entities, but in reality the same group with the same shareholders, it is not necessary to insure rent twice. Once in either name is enough.



Q12. 17

When insuring rent, you need to make an allowance for growth in rental income during the period of insurance and the Indemnity Period.



Q12. 18

With records now being electronic, it is no longer necessary to insure records where regular backups are performed.



Q12. 19

Copy quoting is when one insurance adviser takes the information from an existing policy schedule and prepares a quotation slip with the same details, without any testing to determine if the cover and Sums Insured are appropriate for the client’s needs.



Q12. 20

Business Pack policies, like ISR policies, require a review of the cover and the Sums Insured/Declared Values, limits and sub-limits of liability every single year.



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