Lwood & Co Insurance Brokers Bingley

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Business Interruption Cover – when “Increased Cost Of Working” is not enough

We would always recommend insuring on a Gross Revenue / Gross Profit basis, together with additional costs as from experience following a loss, the policyholder would have to spend more money than necessary in order to keep the business functioning in the short term.

Some policyholders feel “Increased Cost of Working” is acceptable for their needs especially as alternative accommodation and equipment may not be as great.

We see many claims and following a loss, complications can occur if there isn’t the appropriate insurance in place. One example was a fire that occurred to the next door neighbour of a company, and though it did not directly affect our client’s building, there was enough damage for alternative premises to be required. Having “Increased Cost of Working” cover only meant the Loss Adjuster needed proof that it was more cost effective to move than stay in their current building.

Furthermore, loss of Gross Profit cover provides various extensions including “Denial of Access” which is not covered under an “Increased Cost of Working” section.

It is important to understand the difference between the two and how your business would be affected following a severe loss:-

Loss of Gross Profit / Revenue Insurance

If, for example, a fire destroys your premises then your company would not be able to continue to operate. You will be insured for your contents, stock and machinery and possibly the building but you will lose Profit / Revenue whilst the business is out of action and this loss is covered and helps pay wages and other none variable overheads.

Until the business is trading as it was prior to the incident, expenses will be covered though it is important to have an adequate indemnity period. A standard indemnity period is 12 months but we would always recommend 24 months if not longer as it takes time to source buildings, equipment and recover fully following an incident.

We also recommend an extra layer cover called “Additional Increased Cost of Working” whereby money can be spent uneconomically in reducing the loss of gross profit.

Increased Cost of Working

This insurance is theoretically for companies with more simpler requirements i.e. computers, desks etc if the business can be back up in running in the new premises within a couple of days. This insurance is less costly and more suitable, however even a more simpler business can lose gross profit following an incident and so it is worth considering the extra costs of loss of gross profit insurance.

For further information on these services, please contact us on 01274 515 747 or email us at mail@lwood.co.uk

Bespoke Insurance Solution

Every company is different and requires a Bespoke Insurance Programme to be suitable for their needs.

Risk Management

Our Health and Safety consultants can advise on managing your risks which in turn can reduce insurance costs.

Expertise

With over 50 years in the Leisure and Hospitality industry we can advise on the key risks that face your business and what you need to do to reduce them

The ever changing world of insurance is complex and L Wood & Co Ltd have consistently provided the correct advice on the levels of insurance required for many years together with an excellent claims service. Being a family business gives them a “down to earth” approach and their assistance has been greatly appreciated. We are more than happy to recommend them.

Roger Thompson

In an industry that is somewhat confusing with ever changing regulations, Tom and Kevin at L Wood & Co Ltd have consistently provided excellent advice on the levels of insurance we require. As a global company with offices across the world, our insurance requirements are specialised and they have always provided excellent service and good advice. I have no doubts in recommending L Wood to anyone that requires a tailored insurance programme.

Vicki Horsfield

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