Here at Lansdown Insurance Brokers we provide tailored insurance protection to vineyards and ancillary trades at the right price. We’re in almost daily contact with vineyards, and through this regular interaction are aware that one of the least understood covers is Business Interruption insurance (or BI insurance as it has become known).
What does BI insurance cover?
BI insurance protects you against loss of income following damage to your vineyard caused by an insured peril such as a serious fire, flood or similar incident.
It also pays for extra costs to keep your business going and minimise any shortfall in income; although for these to be covered they must pass an economic test, i.e. the extra costs save or bring in at least as much as they reduce any claim.
The indemnity period is the period during which your loss of income is covered. This period of time (usually 12, 24 or 36 months) starts from the date of the claim incident.
When choosing an indemnity period, it’s important to consider the amount of time it would take for your business to be able to trade again independently, considering factors such as how long it would take to rebuild damaged buildings, and replace lost contents and stock. Therefore, it’s arguably better to have an over generous indemnity period, rather than one that might fall short.
BI insurance sum insured
Your sum insured should reflect estimated income for the coming financial year. For 24 months, the sum insured will be twice the estimated annual income, and for 36 months, it will be three times.
Material damage proviso
This is a condition within BI insurance, which states that a claim must have been accepted by the insurers of the damaged business premises, before the BI cover can respond. The purpose of this proviso is to ensure that in the event of a loss, funds are readily available to repair or replace property and therefore minimise the time it takes for a business to resume full trading.
Non-damage BI insurance
There could be times when your vineyard may suffer a loss of income caused by a situation where there is no physical damage to your premises or assets, and most BI insurance covers make provision for circumstances of this nature.
Some common examples of this are the business being affected by:
- damage occurring at the premises of your customers or suppliers
- accidental failure of your electricity, gas, water or telecommunications supply
- prevention of access to your business premises caused by damage to neighbouring property
It’s common for these non-damage BI insurance extensions to be insured for a set monetary limit, which will be significantly lower than your selected sum insured for loss of income.
Do you really need it?
Unlike insurance for your buildings, contents and stock, which covers physical damage, BI insurance covers the income your business would have received had the incident not happened. For businesses affected by a serious loss, BI insurance can mean the difference between ensuring a long-term future or folding.