Bussiness Interruption Insurance
-
Upload
faraznaseer -
Category
Documents
-
view
222 -
download
0
Transcript of Bussiness Interruption Insurance
-
8/17/2019 Bussiness Interruption Insurance
1/30
ROPERTY INSURANCE
Business interruption
insurance
-
8/17/2019 Bussiness Interruption Insurance
2/30
Business
InterruptionInsurance
-
8/17/2019 Bussiness Interruption Insurance
3/30
Presented To:
Prof. Imran Yasin
Presented By:
Hafiz Faraz Naseer Ei14MBA033
Usman Piracha Ei14MBA022
Umer Riaz Ei14MBA01
Anas !ai" Ei14MBA03#
$aseem Ei14MBA00#
-
8/17/2019 Bussiness Interruption Insurance
4/30
-
8/17/2019 Bussiness Interruption Insurance
5/30
Areas of Insurance
B'siness interr'-ti%nins'rance
Fide(ity ins'rance ia"i(ity ins'rance
-
8/17/2019 Bussiness Interruption Insurance
6/30
Business interruptioninsurance
Business interruption insurance a(s%
n%*n as business income insurance
is a ty-e %f insurance that c%&ers the
(%ss %f inc%me that a business s'ffersafter a disaster. 5he inc%me (%ss
c%&ered may "e d'e t% disaster/re(ated
c(%sin+ %f the business faci(ity %r d'e t%the re"'i(din+ -r%cess after a disaster.
-
8/17/2019 Bussiness Interruption Insurance
7/30
“Extended to cover the Acta! "oss#stained $% the Insred drin& aPeriod of Interr'tion direct!%
res!tin& from 'h%sica! dama&e ofthe t%'e insred a&ainst $% thisPo!ic%( to 'ro'ert% not other)iseexc!ded $% this Po!ic%( ti!i*ed $%
the Insred and !ocated asdescri$ed e!se)herein this Po!ic%+
Business Interruption Insuranceprovides :
6ecti%n ,
-
8/17/2019 Bussiness Interruption Insurance
8/30
Critica! E!ements of ,sinessInterr'tion Insrance
1. 5here is -hysica( dama+e t% the -remises %f s'ch
ma+nit'de that the "'siness m'st s's-end its
%-erati%ns.
2. 5here is -hysica( dama+e t% %ther -r%-erty ca'sed "y
a (%ss that *%'(d "e c%&ered 'nder the c%m-any7s
ins'rance -%(icy) and that dama+e t%ta((y %r -artia((y
-re&ents c'st%mers %r em-(%yees fr%m +ainin+
access t% the "'siness.3. 5he +%&ernment sh'ts d%*n an area d'e t% -r%-erty
dama+e ca'sed "y a -eri( c%&ered "y the c%m-any7s
ins'rance -%(icy that -re&ents c'st%mers %r
em-(%yees fr%m +ainin+ access t% the -remises.
-
8/17/2019 Bussiness Interruption Insurance
9/30
-h% is ,siness Interr'tionInsrance so im'ortant
Pr%tects y%'r c%m-any fr%m8
%st ,nc%me %ss %f Maret 6hare
%st 6trate+ic A((iances %r Partnershi-s
%st 5ime %f 9ey Em-(%yees8 %r *%rse %ss %f 9ey Em-(%yees
-
8/17/2019 Bussiness Interruption Insurance
10/30
BusinessInterruption
Coverage
-
8/17/2019 Bussiness Interruption Insurance
11/30
Business Interruption “Chain Rule”
,N 5HE EEN5 ;F
/. A Discrete Event of Ph%sica! "oss or Dama&e
0. 1rom a Ris2 of "oss
3. -here No Exc!sion A''!ies
4. -hich Cases an Interr'tion of ,siness O'erations
T5E PO"ICY CO6ER#
7. The De8ned "oss
9. 1or The De8ned Indemnit% Period
. To Descri$ed Pro'ert%
-
8/17/2019 Bussiness Interruption Insurance
12/30
Direct Loss
6ecti%n ,
Concrrent Casation
Po!ic% )i!! cover so !on& as the case of the!oss is the “'redominant+ or e;cient 'roximate
case
-
8/17/2019 Bussiness Interruption Insurance
13/30
6ecti%n ,
Ph%sica! Destrction ofPro'ert% Not Re
-
8/17/2019 Bussiness Interruption Insurance
14/30
Covered Property
6ecti%n ,
#ervice Interr'tion
Cstomers>#''!iers
-
8/17/2019 Bussiness Interruption Insurance
15/30
Not Covered
6ecti%n ,
Can=t insre 'ro'ert% as the?ood )aters a''roach
#$@ective 2no)!ed&e
necessar%
Insrer mst 'rove that'o!ic%ho!der )as a)are of
dama&e at timeinsrance 'o!ic% ince'ts
-
8/17/2019 Bussiness Interruption Insurance
16/30
-
8/17/2019 Bussiness Interruption Insurance
17/30
>r%ss Earnin+sr%ss Earnin+s sha(( "e defined as the net sa(es
&a('e %f -r%d'cti%n (ess the c%st %f a(( ra* st%c)
materia(s and s'--(ies 'ti(ized in s'ch -r%d'cti%n and
any %ther n%n/c%ntin'in+ e?-enses.=
Basics o business interruption coverage
6ecti%n ,
6 ti ,,
-
8/17/2019 Bussiness Interruption Insurance
18/30
Basics o business interruption coverage
6ecti%n ,,
A t%'ica! 'eriod of interr'tion c!ase 'rovides( in
'ertinent 'art( as fo!!o)s:
“The 'eriod from the time of the 'h%sica! dama&e of thet%'e insred a&ainst $% the Po!ic% to the time )hen )ithde di!i&ence and dis'atch dama&ed $i!din&s and
e
-
8/17/2019 Bussiness Interruption Insurance
19/30
Basics o business interruption coverage
6ecti%n ,
Extended Period of Indemnity - Additional period which
typically covers an insured for loss of market share
Contingent Business Interruption - Covered loss thatoccurs to a company’s suppliers or customers
-
8/17/2019 Bussiness Interruption Insurance
20/30
!o" toCalculate
the Loss
6ecti%n ,,
-
8/17/2019 Bussiness Interruption Insurance
21/30
#ypes o $%penses
6ecti%n ,,
&dditional
'anpo"er
&dditional(tilities
)vertime
Non*)peratingLoss*Related
$%penses
Resale
Price
Purchase
Price
Purchase o +inished
Product or Resale
&bove ,ales Price
#emporary
+acilities
Not i ce
Cost toRetain
Customers
-
8/17/2019 Bussiness Interruption Insurance
22/30
!o" to calculate the loss
6ecti%n ,,
Continuing Expenses
• Fi?ed e?-enses• Payr%(( %f ey em-(%yees• 6%me 'ti(ities• @e-reciati%n•
Rent• %ntract'a( %"(i+ati%ns• Ad&ertisin+• ;thers
-
8/17/2019 Bussiness Interruption Insurance
23/30
!o" to calculate the loss
6ecti%n ,,
Non-continuing or SavedExpenses
• Ra* materia(s and s'--(ies• ;rdinary -ayr%(( &s.
-
8/17/2019 Bussiness Interruption Insurance
24/30
E?tra E?-ense End%rsement
-
8/17/2019 Bussiness Interruption Insurance
25/30
Mitigation• @'ty t% miti+ate.• Miti+atin+ re&en'e m'st "e credited a+ainst the
c(aim.
• %sts inc'rred t% miti+ate m'st "e added t% the
c(aim.
!o" to calculate the loss
6ecti%n ,,
Business Interruption losses are typically
-
8/17/2019 Bussiness Interruption Insurance
26/30
Business Interruption losses are typically
ad-usted by ollo"ing these ive steps:
/. Pin'oint the !en&th of time drin& )hich
'rodction or $siness o'erations )ereinterr'ted $ecase of an insred event
. Determine the
-
8/17/2019 Bussiness Interruption Insurance
27/30
Continued...
6ecti%n ,,
0. Dedct an% sa!es or 'rodction that can $e continedor made ' thro&h the se of existin& inventories( other'!ants( )or2in& overtimes( etc. The dierence is theNet "ost Prodction.
3. !ti'!% the !ost 'rodction $% the nit ,.I. 6a!enet 'ro8t and 8xed ex'enses.
4. Add $ac2 the extra costs associated )ith the a$ovema2e ' inc!din& the extra costs to re'!enish inventor%
sed to maintain sa!es drin& the interr'tion( overtime'remims( etc.
-
8/17/2019 Bussiness Interruption Insurance
28/30
#mmar%
Advice for a successful businessinterruption claim
• Know your coverage
• Set up appropriate accounting procedures after aloss
• Consult appropriate professionals
• Present a realistic, well documented and logicalclaim
-
8/17/2019 Bussiness Interruption Insurance
29/30
ANY FUE#TION
-
8/17/2019 Bussiness Interruption Insurance
30/30