Insurance policies can provide valuable protection against the risks that could have a negative impact on your business and result in financial or material loss.
Loss is one of these risks, although there are certain factors you need to consider before making a claim on this basis.
Insurance companies classify claims related to loss in a number of ways.
Generally speaking, the following scenarios are considered to be a sound basis for a claim against loss:
- If your business suffers loss due to disruption in operations owing to disasters such as flood, storm, bad weather or accidental fire.
- Loss that may occur because of breakdown or failure of equipment, machinery or other vital contents that you need to run your business provided this is not due to manufacturing fault or improper use.
- Inability to run your business because of damage to suppliers’ stock or premises resulting in a delay of supply
- Loss you may experience if customers are not able to visit your premises due to circumstantial reasons such as riots, period of unrest or public maintenance work. For example, emergency road works blocking access to your premises may cause sufficient business interruption to cause a decline in customer footfall.
In the event of loss, your insurance may cover the income you haven’t received during the period of inactivity that results from said loss– that is, the time required to rebuild or repair the damage that has occurred. It may also cover the expenses you incur due to the build-up of overheads during this period.
Cover could extend to temporary relocation costs if you decide to operate from a different location on a short-term basis. This type of insurance is often referred to as business interruption insurance.
The following scenarios are generally excluded from claims against loss:
- If your business suffers loss because of new competition from another company or product.
- If you lose customers because of poor service – for example, through poor product quality or unfriendly staff.
- If the insurance providers believe that the claim being made is fraudulent.