Business Insurance & Covid-19

Kagunn

My Business insurance have agreed to a payout,  cateragised as loss of earnings do to drop in footfall not Government closure but have said that I am only entitled to 35% of the amount, I have queried this and waiting for a reply,  has anybody else had this problem and do you think I should accept this?

davidmcn

35% of what amount?

Kagunn

It’s 35% of the amount they worked out that I would be entitled to from my accounts,

Kagunn

I’ve never made a claim before in 15 years of business.

Kagunn

For example if they said I was entitled to £10,000 but are only giving me 35% of this

dacouch

How much was the total cover your policy covered for Loss of Earnings?
How much did you try and claim from your Insurers

paddyandstumpy

Is it lost revenue or lost profit cover?

Zorillo

There could be lots of reasons, but most likely I would think they are paying for the portion of the loss incurred before the Government  Lockdown.

But without more detail from the insurer, it's just a guess and anybody else would be guessing too, I think.

Chickenlips

A BI claim is supposed to replicate what is left in your bank at the end of the month once all of the bills ba even paid. The only time this changes is if you are under insured or there are special circumstances that would see your cover reduced.

Your BI claim is worked out as follows: 
Turnover * RoGP (assuming it is a GP policy) = loss of gross profit. 
From the loss of gross profit claim, savings are deducted, which include: 
- Staff wages (if they are or furlough with no top up, this is a saving to you and omitted from the claim).
- Government grants.
- Motor expenses. 
- Advertising. 
- Cleaning 
And so on. 
Then, when you are at loss of gross profit less savings, your adequacy of the sum insured is factored in. If you have a value at risk of £100 but cover at £50, you will get 50% of your claim as you are self insured for 50% of any loss. 

Insurers don't set the sum insured, usually this is down to you. I'd assume either savings or under insurance have reduced your claim. Have you asked them to explain how they got to the figure?

Chickenlips

It may also be an interim payment whilst they await further updates on grants ect. 
What did you claim? What is your sum insured? Was your claim just the loss in turnover or gross profit without deducting savings? Are you still trading? 

It is worth remembering that even if there is a limit of £25.000 for three months, it does not mean you automatically get that. It is just the most you are able to claim. Message me if you prefer and have further questions.