This type of cover is given various different names. Revenue protection, business interruption and business continuity insurance are all terms used to describe policies that you put in place to help you get back on your feet when disaster strikes. For example, if your workplace suffered a fire or severe flood, you would not be able to continue you usual business for quite some time. You would hopefully have buildings and contents insurance in place to cover you for replacing the assets that were lost of damaged, but these types of cover do not allow for the loss in income that you will suffer while all this repair work is happening.
What business interruption insurance policies do is make up the income you are losing by the disaster, so that your overall revenue position is as it would have been if nothing had happened.
The sort of things that can be covered in a typical revenue protection policy include:
- Your expenses relating to fixed operating costs. The costs that you still have to meet even though you can not trade as usual.
- The profit that you are losing as a result if not being able to carry on with your normal business activities.
- The costs of moving to and carrying on business in temporary premises.
When setting up a new policy you need to decide how long you want the policy to pay out for. You will need to give careful thought to how long it would take your business to get back to a normal trading condition. Make sure the policy covers you for the full period that you need.
Another type of revenue protection that some insurers offer is key person insurance, or key man cover as it is sometimes known. This is about protecting the business from the loss of a key person that your revenue depends on. The cover is usually based on life or critical illness cover the key person or people. The idea being that it temporarily replaces the lost revenue that is dependent on this person, until a replacement is in place. The policy can cover associated costs such as recruitment and training of a new person.