Business Interruption Insurance & Claims: Questions & Answers

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Chapter 17

Q17. 1 You cannot insure a business that has only just started trading for the first time, with business interruption insurance as it is not possible to calculate the Sum Insured/Declared Value nor can you work out the amount payable until the business has at least a 12-month track record.


Q17. 2 Where the business is extremely new, one way to arrive at a fair settlement of a business interruption claim is for the insurer to make a progress payment(s) based on a percentage of the expected Turnover of the business as recorded in the budget. Then, once the business has returned to pre-loss productivity, the actual performance of the business can be measured and used as a guide as to the level of Turnover that would have been achieved had the loss not occurred.


Q17. 3 A not-for-profit organisation does not require business interruption insurance.


Q17. 4 A good place to start with setting the Sum Insured on a new business is to use the business plan and budget for the business.


Q17. 5 An organisation that would definitely maintain government funding and/or increase donations from beneficiaries need not insure against business interruption other than for Additional Increased Cost of Working.


Q17. 6 The cover for Advanced Loss of Profits is typically arranged through the construction insurance market for the consequential loss risk arising from site accidents, eg. a financial loss due to the project not being completed on time.


Q17. 7 Being such a specialist class of insurance, a general insurance broker or authorised representative is best to seek specialist assistance when confronted with a request to arrange Advanced Loss of Profits insurance.


Q17. 8 With any claim involving Advanced Loss of Profits, it is important to obtain the services of an experienced loss manager as early as possible to identify the financial losses claimable under the policy and present the claim in a professional manner to the insurer and/or loss adjuster.


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