Business Interruption Insurance

Visão Geral

When fire guts a factory, the burnt machines are only half the disaster. The other half is quieter and often larger: the months of lost sales while the roof is rebuilt, the salaries and rent that still fall due with no goods leaving the gate, and the customers who drift to a rival and never come back. A standard fire policy rebuilds the walls. It does nothing for the profit that stopped flowing. That gap is what business interruption insurance was invented to fill.

In this lesson you will learn what business interruption insurance really covers, how a consequential loss differs from the material damage that triggers it, why no claim is paid unless a physical-damage claim has first been admitted, and how the indemnity period and the rate of gross profit turn a ruined trading year into a figure the insurer can pay. You will work the gross profit calculation examiners set every year, and see exactly where candidates throw marks away.

Objetivos

  1. Define business interruption insurance and explain the loss it indemnifies
  2. Explain consequential loss and distinguish it from material damage
  3. Identify the causes of business interruption and the material damage proviso
  4. Explain how the indemnity period and the gross profit figure are determined

Nota de Aula

Emeka owns a plastics factory in Nnewi. He insures the building and the machines for their full value, so when a fire tears through the plant he is confident. The insurer rebuilds and re-equips exactly as promised. Yet eight months later Emeka is close to ruin. Why? Because throughout those eight months his machines produced nothing, his biggest customers moved their orders elsewhere, and the rent, the bank loan and the wages of his key staff went on falling due with no sales to meet them. The fire policy paid for the bricks and the steel. It paid nothing for the profit that stopped. Business interruption insurance is the cover Emeka needed and did not buy, and it is one of the most heavily tested products in the syllabus.

Avaliação da Lição

Parabéns por concluir a lição em Business Interruption Insurance. Agora que você explorou o conceitos e ideias-chave, é hora de colocar seu conhecimento à prova. Esta seção oferece uma variedade de práticas perguntas destinadas a reforçar sua compreensão e ajudá-lo a avaliar sua compreensão do material.

Irá encontrar uma mistura de tipos de perguntas, incluindo perguntas de escolha múltipla, perguntas de resposta curta e perguntas de redação. Cada pergunta é cuidadosamente elaborada para avaliar diferentes aspetos do seu conhecimento e competências de pensamento crítico.

Use esta secção de avaliação como uma oportunidade para reforçar a tua compreensão do tema e identificar quaisquer áreas onde possas precisar de estudo adicional. Não te deixes desencorajar pelos desafios que encontrares; em vez disso, vê-os como oportunidades de crescimento e melhoria.

  1. Business interruption insurance indemnifies a business for: A. The cost of rebuilding its destroyed premises B. The loss of income and continuing fixed costs while operations are interrupted C. The market value of machinery destroyed by fire D. The wages of casual workers laid off after a fire Answer: B
  2. The material damage proviso requires that: A. The business has traded for at least three years B. A material-damage claim on the same property and peril has been admitted C. The indemnity period does not exceed twelve months D. The insured pays an excess before any claim is met Answer: B
  3. A firm's gross profit for insurance is 30,000,000 naira and its annual turnover is 150,000,000 naira. Its rate of gross profit is: A. 15% B. 20% C. 25% D. 45% Answer: B
  4. During the indemnity period a firm's turnover falls by 40,000,000 naira. Its rate of gross profit is 25%. Its loss of gross profit is: A. 8,000,000 naira B. 10,000,000 naira C. 16,000,000 naira D. 40,000,000 naira Answer: B
  5. For business interruption purposes, gross profit is best expressed as: A. Turnover minus cost of sales B. Net profit plus insured standing charges C. Turnover minus all expenses D. Net profit minus standing charges Answer: B

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Perguntas Anteriores

Pergunta-se como são as perguntas anteriores sobre este tópico? Aqui estão várias perguntas sobre Business Interruption Insurance de anos passados.

WAEC SSCE - Insurance - 2015

Pergunta 1 Relatório

(a)Define the term employer's liability in insurance.

(b)State three benefits that can be covered under employer's liability.

(c)State three causes of business interruption.

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