Posts Tagged ‘business’

How To Calculate Your Business Interruption Insurance

Business InterruptionIt is reported that 8 in 10 large commercial insurance claims are underinsured in respect of their business interruption insurance.  We have compiled the following to  help you calculate your cover and what it all means: In order to make sure that you are properly covered it is necessary to know how to calculate the amount of Gross Profit that you need to insure.  If you require a two year indemnity period then, in effect, you have to review the expected level of Gross Profit to be earned in what would be years 2 and 3 after the first year of insurance.   For example if, at the end of 2012, you were calculating the Gross Profit to be insured for a 2 year indemnity period commencing 1 January 2013 and ending 31 December 2014 then you need to calculate the Gross Profit for the period 1 January 2014 to 31 December 2015.  The reason for this is that your Business Interruption Policy pays for a two year period from the date of a loss.  If the loss is at the end of your current intended policy period ceasing 31 December 2013 then your claim will run for year 2 (2014) and year 3 (2015) and it is this period that needs to be insured.

Example (if calculating for a 2013 policy):

You must identify Gross Profit and Turnover for the years 2010 to 2015.  Estimated figures should only be used when actual figures are not available.  The anticipated Gross Profit for the two year period 2014 (£3,200,000) and 2015 (£4,000,000) gives an amount of £7,200,000 for the 2 year indemnity period to commence 1 January 2013.  This exercise needs to be reviewed for each policy renewal and the Gross Profit insured amended accordingly.  This form of cover is called a “Sum Insured” basis. If the Gross Profit is underestimated then you run the risk of having “Average” applied to your claim on a “Sum Insured” policy.  This is where, if for example, you insured for £6,480,000 instead of the correct figure of £7,200,000 and had a claim of £1,000,000 then insurers would only pay 90% (£6,480,000 / £7,200,000 = 90%) and proportionately reduce the claim to £900,000. To avoid average being applied you should be insured on an “Estimated Gross Profit” basis which would remove the problem of average.  Although the figures that you are using may be estimated you must specifically request an “Estimated Gross Profit” policy from your insurers otherwise they will issue a “Sum Insured” basis with an average clause included. We recommend the use of an “Estimated Gross Profit” policy – please speak to us about arranging this cover for you. Business interruption can appear a real minefield.  If you wish to discuss your requirements or have any queries, please do not hesitate to contact us.

Call Bromwall on 01707 883377 or email us on 

Image courtesy of mrpuen /  

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Corporate Manslaughter – Could Your Business Be Found Guilty?

Corporate Manslaughter   Up to one third of all road accidents involve at least one person who is at work at the time.  Now the Government is planning to reduce these figures with tough new laws.  As a result, an employer could face a prison sentence for an accident involving an employee.  

What is Corporate Manslaughter?

The Corporate Manslaughter and Corporate Homicide Act 2007 which came into force in April 2008.  An offence called corporate killing will allow road fatalities to be viewed as a crime.  This means, in the final extreme, that your company may be held ‘vicariously liable’ for a death due to management failure.  In other words you could be prosecuted if your company was shown to have failed to operate adequate Health and Safety controls.  At present, around 20 people a week are killed on the roads.  By introducing these measures it is hoped that these numbers will be reduced significantly. So for the safety of all concerned, its worth taking steps now to protect yourself and your employees.

Your Responsibilities

Make sure that one of your staff is named as having specific H&S responsibilities.  These include checking policies to make sure that work related road safety is adequately covered and if necessary, having risk assessments if you are not sure. It is up to you to make sure that any company cars and private cars used on company business are legal and roadworthy.  A system should be in place that ensures: – All cars are regularly services and maintained and are matched to the needs of the job. – Drivers are required to carry out regular safety checks. – Every driver is properly trained and medically fit. – Drivers hold the right license for the vehicle they are driving. – Licences are checked for endorsements. – All cars are fitted with hands free phones as standard where necessary. Health and Safety legislation also says that anyone driving on business should have rest breaks at two hourly intervals and a stay over policy to avoid a long drive home after a late meeting.

Alerting Your Employees

Employees need to be made responsible for regular checking basics like oil, water, tyre pressure, etc.  They must also make sure that their personal car insurance covers them for business trips if necessary. In most cases these precautions are already in place but it is worth checking regular just to make sure. Find out more information by clicking on Road Safety at For more information on Corporate Manslaughter go to and search Corporate Manslaughter.

If you wish to discuss your insurance arrangements or your have any queries regarding your business and corporate manslaughter contact us on 01707 883377 or email us on


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