Business interruption insurance is one of the insurance types, it covers the risks of businessperson/organization/company/factory/shop if in any case their business is interrupted.
In this pandemic time, most of the businesses are interrupted or stopped for a significant number of days or months. So, the people who have already got their business covered as part of this ‘Business interruption insurance’ plans they may not bother, as their losses will be covered by the insurance company.
Having said that the lock down losses are not covered by most of the insurance policies in India.
It is explained more in below sections.
What type of interruptions are covered in BII?
In general, the business interruption insurance means, if the business is not continued for some reasons and the income is not generated in those situations the insured business can claim the damages from the insurance company.
The type of interruptions includes natural calamities, disasters, Fire, and riots.
Will BII cover lockdown losses due to Corona?
It depends on the terms and conditions that the insured have with the insurance company.
in India, the business insurance policies are bought for high chance risks such as fire, breakdown of machinery, earthquake etc. So, in this case it looks like the corona pandemic losses are not covered by most of the insurance policies in India.
Here is some more information on CNBC
Is business interruption a separate policy?
No, in India the BII is part of a business insurance policy. It cannot be bought separately.
i.e. if a business or company wants to buy a policy just for income losses, there is no option. They can only buy a Business insurance policy which will cover a physical damage to the property/machinery etc.
Will Business interruption policy cover profit losses?
Some insurance companies cover the gross profit losses due to physical damage.
HDFC ergo is providing such insurance policy. Here are some details on the gross profit coverage.
Is Business Interruption Insurance similar to Financial Lines Insurance?
The financial lines insurance includes different types of risk covers. It generally covers Fire Loss of profits, Machinery Loss of profit, Delay in Start up or Advanced loss of profit.
If we observe all the covers mentioned above, though they cover the profit losses in the business, they are only covered only when a physical damage is occurred due to Fire/Machinery/Accident to machinery in transit etc.
So, we can not really say that financial lines insurance policies that are available in the current market will cover business interruption due to pandemics like Covid-19.
Here is an example of ‘Future-Generali’ insurance company which is providing Business interruption cover as part of property/business insurance.
What is Indemnity period in Business insurance?
The indemnity period is nothing but the time it took to resume the business to normal level before an interruption occurred.
Example: A factory is manufacturing certain amount of goods for every month. And an interruption occurred to the production and the production is stopped for some time, then started production slowly, it only gained the production level to normal after couple of months. So, the time from when the production is stopped till the production gained to normal level is considered as Indemnity period.