Business Interruption Insurance

In light of the unprecedented economic losses due to the lockdown, businesses in India are looking at business interruption insurance for a way out.

About

Business interruption insurance is a type of insurance that covers the income loss of a business due to a disaster. It covers losses like rent, operational charges, salaries, etc. apart from profits as the business may not be able to operate after the disaster.

In India

Business interruption insurance in India is not issued as a stand-alone policy but is incorporated in the machinery and boiler explosion policy or fire policy. It protects net profits, increase in cost of working and standing charges to sustain a normal turnover. The business is required to have suffered a physical damage to trigger the insurance cover.

Use for Losses due to COVID-19 Crisis

The current losses have been caused by the government imposed lockdown and not due to any physical losses arising from disasters like fire or flood nor the presence of the virus in their premises. Insured businesses are looking to get their losses due to COVID-19 crisis covered under the ‘loss of profit’ clause.

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