Indemnity Period – its all part of Business Interruption insurance
Business Interruption is an essential cover under your motor trade insurance policy, keeping your business “in business”.
What is an indemnity period?
What is an indemnity period?
An indemnity period on Business Interruption Insurance is the length of time that the insurance company will pay under a motor trade insurance policy or indeed any other insurance policy where business interruption is covered. Indemnity periods generally start at 12months, then 18, 24 and 36.
A few bits to consider
Just remember that we do not live in an ideal world and even if you think it will all go to plan it inevitably won’t. Its very easy just to go for a 12 month indemnity period as that is the norm – we always recommend an indemnity limit of 24 months but before you opt for the 12 months consider a few of the following.
If your business is devastated by fire for instance the chances are that that the building you occupy could be demolished and rebuilt. Will it be rebuilt in modern materials or built in its traditional style – will it take longer than 12 months?
Are your premises part of a larger complex, say located on the ground floor of larger premises – you could be a small part of a larger building – potentially more than 12 months to rebuild. Consider extending the indemnity period, don’t just assume that its going to double your business interruption section premium.
Do you have any specialist machinery or was it a bespoke item. Is the machinery that you use unique in any way and how long will it take to obtain it? If an item of equipment is obsolete or has a long delivery time then perhaps its better looking at alternatives and at least have a contingency in place.
I know the item of machinery I use is now obsolete, what do I do?
This is more to do with the property section but it could have an adverse effect on your business, if you know its obsolete, don’t wait until something happens make sure you can replace it now. If its not replaceable consider your options.
What if the business is only partially effected, how does that work then?
If you have a small claim, say a small fire in the workshop the business interruption indemnity period may be largely irrelevant. You may still be able to carry on working from the premises but only on limited capacity, say two vehicles instead of your usual five being worked on at any point. The fact is you will still have an interruption in your business and a resultant reduction in turnover.
A final thought
Irrespective of what premiums are, if you have a loss then you will be glad you paid it, basing your purchase purely on premium is likely to have consequences further down the line. Get it right the first time.
Looking for Business Interruption Insurance?
Let us look at your requirements for this type of cover, being specialist brokers to the sector we have instant access to all the motor trade insurance markets, we provide fast and competitive quotes tailored to your needs.
You may also be interested in: Why do I need Business Interruption?