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A lost profit, or a loss of profits?

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One of the most complex parts of insurance cover is business interruption, so maybe a short explanation is in order?

For most business the cover will be based on “Gross Profit” and that is turnover, less the cost of raw materials with nothing else deducted, especially wages, as you will need to pay your staff.

For service businesses its “Gross Revenue”, which equals turnover and for landlords it can be loss of gross rental income.

The next thing to understand is that in 99.9999% of cases you cannot have a claim for business interruption, unless physical damage has occurred.

This has to be for one of the identified perils, such as Fire, Lightning, Explosion, Flood, or Storm!

There are a number of extensions, but these vary greatly between policies. In some cases the cover is as little as £25,000.

These extensions normally include the following:

  • Failure of public utilities.
  • Denial of Access – Physical Damage.
  • Damage at supplier’s premises – Can’t supply you with what you need.
  • Damage at customer’s premises – Stops buying from you.
  • Murder, death or suicide – Premises closed whilst police investigate.

In some cases, there are other extensions, but these vary greatly with very low sums insured.

If you really want to know, you have, talk to a professional and take the time to understand what cover you need, #becauseaccidentshappen to nice people all the time.

Feel free to message me or call the office on 029 20 470 375 for a free, no obligation consultation.

It could be the most valuable phone call you ever make 😎

 

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GOLDEN NUGGETS!

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Business Interruption cover, or Loss of Profits Insurance as it is more commonly known does one thing!

It provides you with a monthly payment, when you can’t trade, following a significant damage to property which prevents you from operating your business.

Fire & Flood are probably the worst case scenarios, but there are others.

In all cases you need to specify 2 factors

  • The Gross Profit or Gross Revenue figure over 12 months
  • The indemnity Period, 12, 16, 24, 36 months

Gross Profit should be TURNOVER less the cost or raw materials (If there are any)

The indemnity period needs to be long enough so you can fully recover your business in any situation.

Get these two numbers right and after the insurers have remedied the damage or loss to your physical assets, they will pay you until you return to the same level of profit and turnover, up to the length of the indemnity period, if necessary #becauseaccidentshappen to nice people all the time.

Get it wrong and your business may never recover!

Have a great week 😎

 

 

Important numbers

Top Tips

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Here are 2 top tips to keep the cost down, when arranging your business insurances.

There are 3 numbers which are used to calculate the premium, they are:

  1. Physical sums insured
  2. Gross Profit
  3. Turnover
  4. Wages

Top Tip 1

Both (1) & (2) need to be accurate as these are values on which your claims will be based. If they are too low, your claims will be reduced by the amount of under insurance as a percentage %

They should be the replacement cost ITEMS or the cost to reinstate BUILDINGS.

Top Tip 2

Both (3) & (4) are simply used to calculate the premium once a year. They are not sums insured, so whilst they need to be reasonable, they should not be overstated. If they are, you are simply going to pay an increased premium based on something which hasn’t yet happened. Last years actual is a perfectly good number.

Brokers working on commission will want the higher figures, because they will earn more money.

Because we work on fixed fees, not commission, we will never ask you to overstate these numbers.

We want to keep your premium as low as possible, because we know that will make you happy.

Have a great day 😊

Positive feelings

It’s a new dawn and a new day and I’m feeling good!

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Bet you just sung that with a southern twang?

What gets you going on a Monday morning?

For me its knowing that I can make a real difference to people who care about getting the right advice at the right time. If they are prepared to engage with me and let me find out all about their business then I can understand what they do, assess the exposures and give them the correct advice.

Now we all hope we don’t ever need to use our insurances, but in truth that’s not the real world and with no-win no-fee legal cases on the rise, sooner or later someone disgruntled individual will probably have a go at you, justified or not.

If you have valuable assets, buildings, stock, equipment and machinery, then they must be protected correctly. If they get destroyed, damaged or stolen and your insurance isn’t correct, your claim could be void and you are left holding a very expensive piece of paper.

Getting the correct advice and guidance is essential, suitability is everything and the devil is always in the detail of the wording, which to be honest most policyholders never read.

We do, so you don’t have to.

Want some good advice, free at the point of discussion. Just call 029 20 470375 or message me here.

Have a great week 😊

BIBA 2023

BIBA 2023 Manchester Central

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As a proud member of The British Insurance Brokers Association for over 40 years, and now as a board member, I can say without any hesitation that the BIBA conference in May each year, bringing brokers and insurers together in one place for three days, is one of the best and most productive weeks of the year.

This year the theme is “Rising to the Challenge” The BIBA Conference 2023 | The British Insurance Brokers’ Association

If you have annual arrangements you wish to arrange or renew, doing it at the BIBA conference each year is probably the most effective way. The range of providers present and more importantly decision makers, all in one place make for an excellent conference.

Add to that the line up of keynote speakers and sessions each year, bring everyone up to date with what’s new and emerging as well as all the legal and regulatory matters that will affect our businesses going forward over the next 3 – 5 years. If you are an insurance professional #biba2023 is the place to be.

It’s also nice to be in the middle of something which has been in planning for the last 12 months, leading directly from the manifesto which is published in January each year. In 2023 we are #managingrisk & #deliveryingstability.

Looking forward to meeting friends old and new and securing services that will directly benefit our clients going forward.

Have a great week, I know I will.

 

 

 

Loss of Profit

Pardon the Interruption.

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Let’s Talk about Insurance basics 101 – Part 3

One of the most misunderstood parts of insurance cover is business interruption or Loss of Profits insurance, so may be a short explanation is in order?

For most business the cover will be based on “Gross Profit” and in insurance terms that is turnover, less the cost of sales and crucially with nothing else deducted, especially wages as you will need to pay staff as the business recovers.

For service businesses its “Gross Revenue”, which equals turnover and for landlords it can be loss of gross rental income. The key thing is when designing a solution to make sure that the correct measure of income is identified.

The next thing to understand is that in 99.9999% of cases you cannot have a claim for business interruption, unless and until physical damage has occurred. This has to be for one of the identified perils, such as Fire, Flood, or Storm. Crucially and much in the news, disease is not a peril, so could never have triggered a business interruption claim in this respect.

There are however a number of non-damage extensions, but these vary greatly between policies, in respect of what is covered and how much cover is given for each. In some cases the cover is as little as £25,000, but can be as great as £500,000.

These extensions always include the following:

  • Failure of public utilities
    • Gas, electric and the like.
  • Denial of Access
    • Damage at neighbouring premises or on access roads
  • Damage at supplier’s premises
    • Can’t supply you with what you need
  • Damage at customer’s premises
    • Stops buying from you
  • Murder, death or suicide
    • Premises closed whilst police investigate

In some cases, there are other extensions but these are not always present and the cover and amounts are generally very small and limited to events happening at the insured premises.

So, if you really want to know what business interruption cover you have, talk to a professional and take the time to understand the cover, #becauseaccidentshappen to nice people all the time.

Feel free to message me, or call the office on 029 20 470 375 for free, no obligation consultation.

It could be the most valuable phone call you ever make.