Monday 21 May 2012
Cutting back on business interruption insurance can prove to be a false economy - and even a company killer.
This is the view of Steve Foulsham, head of technical services at the British Insurance Brokers' Association (Biba), who says cover policies can help keep companies going in the event of an unexpected disaster.
He explained that some business leaders have been prepared to sacrifice business interruption insurance during the economic downturn, as they aim to cut costs and preserve their budgets.
But this leaves them badly exposed in the event of fire, flood, theft, technology breakdown or other unexpected events.
Sometimes insurance can be the difference between a business surviving or going under, Mr Foulsham stated.
"If you have your claim – whether that be a fire claim, flood claim, theft, or whatever - the policy that covers your contents will replace those contents," he commented.
"But what it won't do is pick up the lost business which you suffer from the time of the loss until everything is put back together again. During that period, because you can't deliver, your customers will go somewhere else and of course you have lost them, usually forever."
Mr Foulsham said it is "very important" to make up that lost income for the period the business has been affected.
That is what business interruption insurance offers - a financial bridge until the company can get back on its feet.
Posted by Dan Smith