Our company recently faced fire accident. we have insurred Gross Profit i.e business interruption insurrance. Can someone please explain how insurance people will calculate this figure which is related to business interruption.
REGARDS
Business Interruption Insurance
Answers
You will need to provide documentation related to lost income and related expenses in the form of contracts and invoices. You can probably start by providing historical statements that evidence your lost estimate and wait for thm to ask for the details. If you have audited statements that support your estimates the insurance company may accept that as documentation. You should look at this like it is an audit.
Most insurance carriers require a Business Income Worksheet to calculate the coverage. I have completed one each year as part of our renewal process. Most of the information is obtained from your income statement (revenue/paryoll/inventory etc.)
I am in the process of completing our Business Income Worksheet. Before meeting with my broker, I would like to educate myself a little more about specific issues related to this coverage. Specifically, I'd like to learn more about coinsurance and extended business income. If anyone knows of a good resource for this type of information, I would appreciate it.
Something to keep in mind, and it is a up-hill battle; you don't necessarily want to do straight-line income averaging.
Most/Many businesses have busy and slow seasons and should your interruption occur during your busy season, you will need to document it.
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