Business Interruption Insurance: Indemnity Period

In the latest instalment of our series on Business Interruption Insurance, Nicholas Marshall explains everything Movers & Storers need to know about Indemnity Period(s).

What is an Indemnity Period?

The Business Interruption Indemnity Period is the period during which the business results are affected due to the loss or damage, beginning with the date of the loss or damage and ending no later than the Maximum Indemnity Period. The intention is for insurers to provide cover from the date of the loss up until the time your revenue has returned to the level prior to the loss.

What indemnity Period should I select?

When considering what Indemnity Period to choose, it is important to note that it could take you many years to return to the pre-loss income.

What do I need to consider when calculating the Indemnity Period?

When calculating the Indemnity Period you should always consider the worst-case scenario. In the event of a major catastrophe at your storage premises, your revenue would cease immediately. The Indemnity Period should factor in the time from the loss until the storage facility is back up to pre-loss occupancy.

So, in essence, the question is, how long would it take to replace your income should your storage facility be totally destroyed? Important factors to consider are:

• Demolition & Site clearance
• Planning permission
• Designs for a replacement building
• What is access like to the site location
• Construction of the new facility
• Size of the property and how many floors
• Internal fit-out, including mezzanines and storage units
• Getting your storage facility back to pre-incident occupancy levels

Read more from our series on Business Interruption Insurance here:

PART 1: What is Business Interruption Insurance

PART 2: How to Calculate Business Interruption Sums Insured

PART 4: Tailoring Your Business Interruption Insurance to Suit Your Needs