Business interruption for charities

Have you considered the potential impact to your charity should disaster strike?

Have you considered a fire, flood, or an opportunistic hacker? If not, it might be time you did!

Let us take a look at what’s covered under business interruption.

What is business interruption insurance?

Business interruption insurance provides cover for losses following an incident that interrupts or interferes with your normal business activities. Most standard charity insurance policies should include business interruption as part of the package.

Business interruption insurance will only protect against the risks specified on the policy.

For example, communicable diseases (i.e. pandemics) are a common exclusion of business continuity insurance policies. Some business interruption policies include cover for specified diseases but, on the whole, Covid-19 was not covered by many policies due to the specified diseases extension.

What does business interruption insurance cover?

Business interruption insurance will usually provide cover against losses following (and in consequence of) material damage to your property at an insured location, although this cover will vary policy to policy. This cover will be in the form of gross profit, gross revenue, rent receivable or increase in cost of working with an indemnity period of normally 12, 18, 24 or 36 months.

Business interruption insurance could cover the following risks:

• Extreme weather events, such as flooding

• Cyber attacks

• Fire

• Electrical failure or equipment breakdown

• Denial of access – for example, unexpected roadworks preventing customers or clients entering your premises

• Loss of customer attraction caused by events such as a bomb threats or physical damage in the near vicinity (usually within a specified distance)

• Utility failure – such as gas, electricity or water supplies

• Failure of telecommunications and internet service providers

• Death or criminal investigation of a trustee

What is commonly not covered with business interruption insurance?

• Communicable diseases (illnesses caused by viruses or bacteria spread through contact with contaminated surfaces, bodily fluids, blood products, insect bites, or air transmission) – i.e. pandemics

• Acts of terrorism (usually not including bomb threats)

• Cover is also usually not provided if your organisation’s activities have discontinued permanently or a liquidator is appointed.

Why does my organisation need business interruption insurance?

With a year as difficult as 2020, it’s never been more important to ensure you consider emerging risks to your organisation.

This year it has become clearer than ever the positive impact a robust Business Continuity Plan can have for an organisation. A trustworthy business interruption policy should be at the heart of your business continuity plan.

Considering the potential impact of increasingly common risks, making sure you have the right business interruption insurance in place could be a big step towards ensuring your charity thrives under unprecedented circumstances.

For friendly professional advice click HERE to visit our charity page and find out more.

Have any questions? please don’t hesitate to contact one of our team

Stuart.belbin@ascendbrokingold.co.uk  |  Office: 01245 449067