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A picture of a building site in the middle of summer. The words "Business Interruption and Your Revenue Streams" float in green below.

Business Interruption and Your Revenue Streams

There are a number of ways in which businesses protect their revenue streams.

The more traditional routes of great customer service helping to retain your clients through to opening new revenue channels to gain new clients. However, what happens if your business were to experience a catastrophic event? What would happen if your business premises had a fire or you were flooded? What would happen if you had a long term interruption to your electricity supply? Do you have enough resources to continue trading for the following months whilst you replace your equipment and repair your building? What would happen to your customers if you couldn’t meet their orders?

Would they stay or would they go? Would you be able to continue to pay your key employees whilst you were not trading?

If that’s not enough, what would happen if one of your third party suppliers experienced a similar catastrophic event? In a survey conducted by IBM (2012), they found that “Businesses are increasingly dependent on complex networks of products and services from third party suppliers. 72% of participants in the survey don’t assess supply chain vulnerabilities”.

If you experience material damage to your key assets, causing you a loss or difficulty in paying your bills, is there anything you can do to help ease that worry? Business Interruption insurance would cover your loss revenue and support whilst you get back to the trading point you were at prior to the event.

Before we go further, how can you be sure that your key customers and suppliers are also protected? Ideally, you would need to see a copy of their policies that cover them for any interruption so they can continue to trade. This is a delicate area, but if they have Business Interruption insurance, then you know that they can survive the catastrophic event or you can extend your cover to include events at your key customers and/or suppliers. Without Business Interruption insurance, the chances of their survival is greatly reduced. Work closely with your supplier and where possible, become more aware of other suppliers who might be able to step into the breach.

What is Business Interruption Insurance and what is covered?

Val Jackson (Chartered Insurance Institute, 2018) defines Business Interruption insurance as it “provides cover for the financial losses due to an interruption to a business caused by material damage to property. There are two key elements to a Business Interruption policy, which are defined in the policy:

• the time period for which the interruption will affect the business (known as the Indemnity Period)
• the maximum amount that needs to be insured (usually called the Gross Profit).”

In principle, Business Insurance could cover you for additional expenses in ensuring that your business keeps on trading. Loss of revenue stream as a result of equipment break down can also be covered by this insurance.

Call BEAM now on 0121 585 5725 for a chat about the best way to protect your business. You can email us on scotty@beaminsure.co.uk and request a call back for more information. If you want to hear more, click on the video below.


 
BEAM is an advice led independent broker for commercial insurance based in Halesowen, West Midlands. Established in 1995 by Dave Johnston, we have created strong business relationships with the business community throughout the West Midlands. Your business insure hands is more than a strap line. It is part of the foundation of our business process.

References

IBM (2012) IBM index reveals key indicators
of business continuity exposure
and maturity. South Bank, IBM Corporation. [online] https://www.strategic-risk-europe.com/download?ac=28766 (Accessed 02 July 2019).

Jackson, V. (2018) Business interruption insurance, 13 October [online], https://www.cii.co.uk/learning/knowledge-services/reference-resources/classes-of-insurance/business-interruption/ (Accessed 02 July 2019).

Heather Adams

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