Work out business interruption loss instantly with clear inputs, formula shown and shareable results.
A business interruption claim is lost insurable gross profit over the indemnity period, plus increased cost of working incurred to mitigate the loss, less variable costs genuinely saved while trading was suspended. Insurable gross profit is a policy definition, not the accounting one.
Lost gross profit
Lost GP = Annual insurable gross profit / 365 x Interruption days
Claim
Claim = Lost GP + Increased cost of working - Saved variable costs
Indicative estimate only. Actual settlement depends on the policy definition of gross profit, indemnity period, waiting period, trend clauses and adjuster assessment. Not insurance advice.
Because the policy adds back most fixed costs and standing charges that continue during the outage. Using the accounting figure typically understates cover and causes underinsurance.
The maximum time the policy will pay for, chosen at inception. It must cover full recovery to pre-loss trading, which for specialist plant can exceed 24 months.