Business Interruption Claim Glossary
This glossary defines 20 terms used in business interruption claims and says how BIClaimPro handles each one. Every figure BIClaimPro produces is an estimate.
Business interruption
Business interruption is the income a business loses because an insured event stops or slows its trading.
How BIClaimPro handles it: BIClaimPro works out the loss as an estimate from your sales history, your profit and loss statement and your policy terms, and shows the working.
But-for revenue
But-for revenue is the sales the business would have made if the loss had not happened.
How BIClaimPro handles it: The tool projects it from your sales history. The method depends on how much history you have, and the report names the method used.
Period of indemnity
The period of indemnity is how long the policy pays for the loss, counted from when the loss starts.
How BIClaimPro handles it: You enter it from your policy. On Gross Profit, Business Income and Standing Charges cover it caps the recovery after reopening.
Waiting period
The waiting period is the first part of a loss that the policy does not pay for.
How BIClaimPro handles it: You enter it in days. The tool takes out the normal sales and the actual sales for those first calendar days of the loss.
Gross profit cover
Gross profit cover pays the profit the business lost plus the insured fixed costs that carried on.
How BIClaimPro handles it: The tool uses the rate from your P&L: Rate = (Net Income + Insured Fixed Costs) / Revenue. Covers the loss period and the recovery after reopening, up to the end of the indemnity period.
Gross earnings
Gross earnings cover pays the lost revenue less the costs that do not continue or are not insured, and it follows the policy wording on when cover ends.
How BIClaimPro handles it: The rate is the same as Gross Profit on the same P&L. Rate = (Revenue - Variable Costs - Uninsured Fixed Costs) / Revenue, the same rate as Gross Profit. Cover ends when operations resume, unless the Extended Period of Indemnity (EPI) endorsement applies; then the recovery may be covered for the EPI days.
Standing charges
Standing charges cover pays the fixed costs that carry on while trading is stopped.
How BIClaimPro handles it: The tool uses insured fixed costs only. Rate = Insured Fixed Costs / Revenue. Net Income is not insured under this coverage. Covers the loss period and the recovery after reopening, up to the end of the indemnity period, like Gross Profit.
Business income
Business income is the name some policies give to the cover that pays the lost profit and the continuing insured costs.
How BIClaimPro handles it: BIClaimPro offers it as a cover type. It is worked out the same way as Gross Profit and differs only in the name.
Insured fixed costs
Insured fixed costs are the costs that carry on during a loss and that the policy covers, such as rent.
How BIClaimPro handles it: You mark each fixed cost Insured or Not insured in the P&L. Insured fixed costs are inside the rate and are never added on top of the claim.
Saved costs
Saved costs are insured costs that were lower during the loss than they normally are.
How BIClaimPro handles it: You enter what each insured fixed cost actually was in every loss month, and a saving caused by the loss reduces the claim. A blank month is never counted as zero.
Extra expense
Extra expense is a new cost the business has because of the loss, such as temporary premises.
How BIClaimPro handles it: It is claimed only when marked Insured, as it was incurred in each loss row, up to the extra expense limit in your policy. An extra expense marked Not insured is shown and never claimed.
Ordinary payroll
Ordinary payroll is the pay of temporary, part-time and casual staff, as opposed to the key staff the business cannot run without.
How BIClaimPro handles it: You choose how your policy treats it: fully covered, excluded, or limited to a number of days. When part or all of the loss is not covered for ordinary payroll, those days use a second, lower rate.
Coinsurance
Coinsurance is a policy clause that reduces a claim when the amount insured is below a set share of the exposure.
How BIClaimPro handles it: You choose Not in policy or a percentage. Where it applies, the claim is reduced in proportion, after the waiting days and before a flat deductible and the policy limit.
Policy limit
The policy limit is the most the policy pays for the claim.
How BIClaimPro handles it: A limit left blank or at 0 means no limit was entered, so no cap is applied. When the cap applies, it is the last step, and the report says the claim is limited to the policy limit.
Deductible
A deductible is the amount of the loss the insured bears before the policy pays.
How BIClaimPro handles it: You can enter a flat dollar deductible. It is subtracted after coinsurance and before the policy limit, and the reports explain it in a note.
Extended period of indemnity
The extended period of indemnity is a policy endorsement that extends cover beyond the date operations resume.
How BIClaimPro handles it: You switch it on and enter the days. On Gross Earnings cover the recovery is then claimed for those days. It never changes the rate.
Loss-start month
The loss-start month is the calendar month in which the loss begins.
How BIClaimPro handles it: It is not part of the sales history. When the loss starts after the 1st, that month is a part month and only the loss days are claimed. You can add that month's normal full-month sales on the loss row.
Recovery period
The recovery period is the time after reopening while sales are still below what they would have been.
How BIClaimPro handles it: The tool claims it only from the sales you enter for each recovery period, compared with normal sales for those days.
Proof of loss
A proof of loss is a formal sworn statement to the insurer that sets out the date and cause of the loss, the amount claimed and the support for it.
How BIClaimPro handles it: BIClaimPro does not prepare or file one. Its PDF and Excel reports show the working behind each figure, and a qualified professional should review them.
Contingency buffer
A contingency buffer is an allowance added to an estimate to cover uncertainty.
How BIClaimPro handles it: You can set it from 0 to 25%. It is added to the calculated loss before coinsurance.
Where to go next
The guide shows how these terms fit together in a calculation.