Questions and Answers

Question:- I currently have a unit at an indoor market but the market will be undergoing some renovations. Can I claim against my insurance policy for the loss of earnings for the period when I’m not trading?

Answer:- I can’t answer this with total certainty without seeing your insurance cover, but most likely, it is almost certainly not something that you would be covered for under your insurance policy.

Firstly, I would suggest you check any lease agreement that you have and see what the landlord will do in the event of this kind of situation. Sometimes, if possible, the lease will suggest an alternative site may be provided if available for some or all the period when otherwise you couldn’t trade. Though this can often be limited by lack of suitable alternative locations or other reasons. Returning to insurance, most comprehensive commercial policies that cover property/ material damage will offer a separate section of cover for Business Interruption (loss of profits or revenue, some might even offer extra covers like loss of rent or increased expenditure and more).

The basic cover is designed to indemnify the policy holder for the agreed or stated sum insured for a specific period with the intention of making up the difference for the period of time it takes to get the business back to the same state of operation as before the claim. However, the reason why I can comfortably, suggest that cover most likely won’t be in force is that cover is only in force subject to a loss following a claim against an insured incident, something that could not have been realistically foreseen to happen with any great likelihood. So, for instance, just closing down purely to renovate is not down to ‘bad luck’.

The fact that you have been advised in advance also means it was not unforeseen and would not be covered. However, if the renovation is required following an insured incident such as a fire or flood, this could change things. So, if a fire or flood or other insured incident caused damage directly to your unit, if you have Business Interruption cover it would cover the downtime when you cannot trade. Furthermore, if your unit in the market was not damaged, but the market had to be closed for safety reasons e.g. the building’s structural integrity, potential health concerns over dirty water from flooding etc. and you could not trade, you will often find good policies cover ‘denial of access’. Should you find yourself needing to make a claim for Business Interruption, you will have to be able to substantiate your claim by providing information such as estimated takings for the period, as well as recent takings over the last few months and takings over comparable periods over the last year or two, if possible.

The reason these figures are required is to see how your business is currently performing compared to equivalent periods and to keep an eye out for trends that suggest how the business would expect to have performed were it not for the reason for the claim. Obviously, they are there to compensate appropriately and there would not be a valid claim if a business was making a loss! Business Interruption cover not only has a value or sum insured which is the maximum amount that can be paid out in event of a loss, but there is also an ‘indemnity period’ which is the maximum length of time you are covered for from the time of the incident.

Depending upon your trade and circumstances, you may want a shorter or longer indemnity period. For example, if you are highly transient and can effectively relocate quickly and easily such as a market trader, trading from a stall with several other markets in the area that you could potentially trade at, a shorter indemnity period would be sufficient. If, on the other hand, you have more complex requirements or need specialist equipment or planning permission, then a longer period should be considered.

This information was supplied by Bill Imber BSC (Hons), Cert C.I.I., GMImber & Sons Ltd., Insurance Brokers,
phone 01342 327250, who specialises in insurances for the Retail, Crafts and Market Trading Industries.