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Heritage Insurance Business Panel Q&A: 2

In this week's Business Panel column in the Guernsey Press, Stuart Butler, Client Relationship Director at Heritage Insurance, reviews the insurance cover available for businesses that have to stop trading, temporarily or otherwise, due to unexpected and insured events.

Question:

Storms earlier this year closed Perelle Garage and convenience store on safety grounds, which must have had a big impact on the business. Is there anything I can do to protect my firm in such circumstances?

Stuart Butler replies:

Fortunately there is and business interruption insurance covers you for loss of income during periods when you cannot carry out business as usual due to an unexpected and insured event.

It aims to put you back in the same trading position you were in before the incident occurred and compensate you for any reduction in profits or revenue or increased costs of running your business as a result.

As such, it is one of the most important elements of insurance for a business – and our experience indicates it is one that many people overlook or actually underinsure for, believing it will never happen to them or that they won’t suffer a financial loss.

We’ve seen some local businesses insuring for interruption losses of just a few hundred thousand when the realistic figure was in excess of £5m.

As an example, meeting staff costs – so you can hold on to your chief asset, your people – and being able to do so for long enough to replace premises or essential equipment costs more and takes longer than many businesses estimate and lack of cover, and therefore absence of stage payments by their insurer, frequently destroys businesses before they can get back on their feet.

Talking to your broker can ensure you have the right cover for the right sum and for long enough – two to three years is sensible – and do regularly review the cover you have. It’s too late after an incident occurs.

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