Business Interruption Cover – when the worst thing happens…

Your business has been going well and your turnover has increased, making more profits. What you may not have taken into account is to review your Surgery insurance, in particular the Business Interruption part of the policy. Generally dentists keep renewing the same surgery insurance policy and, if it is not reviewed, the policy may not be fit for purpose.

When a major incident occurs at the practice, such as a fire or flood, you may instantly think about the buildings or contents or specialist dental equipment which will be damaged and the cost of replacing it. But what you need to consider is the impact the incident may have on your loss of gross revenue. If you have to close for a period of time you need to ensure you have adequate provision within your insurance to cover this, it is known as Business Interruption Cover.

We do come across many practices where the turnover has increased significantly however the insurance cover has never been reviewed and updated resulting in an underinsured practice. If the worst happens and you are under insured you may not get sufficient to repair the surgery and get yourself up and running as soon as possible. It is essential to review the policy and make sure your cover is up to date and current.

Business Interruption Cover covers a number of potential scenarios which could lead to the loss of revenue at the practice and you should ensure your policy covers the following:

• Prevention of Access to the property

• Failure of Public Utilities

• Loss of Deeds and Documents

• Compulsory Closure

• Problems With Unspecified Suppliers

• Loss of Property in Transit

• Issues at Contract Sites

• Book Debts

• Loss of Property (temporarily removed)

You will also need to check with your current insurance provider what excess period your policy has under the Business Interruption section. The excess period is the time-frame that needs to expire before your policy will cover you.

Finally, do check you have adequate cover in respect of the indemnity period your practice has should it need to close for repairs. Whilst it may be possible to get your practice back up and running within 12 months, for many properties this isn’t possible. Consideration needs to be made in respect of the planning regulations and processes, particularly if you have a listed property, as the process can take significantly longer than a year. We would recommend for listed properties an indemnity period of between 2 to 3 years and for all other properties a minimum of 18 months.

(posted 9 Sept 2014)

PLEASE NOTE – COMMERCIAL FINANCE & TAX FUNDING SOLUTIONS ARE NOT REGULATED BY THE FCA.