The “operating loss” guarantee compensates for lost turnover and fixed costs during the interruption period, according to a coverage scope and waiting period defined in the contract.
When a disaster occurs (fire, flood, water damage), your premises may be inaccessible and your business interrupted, sometimes for several weeks. Business interruption insurance then intervenes to compensate for the loss of earnings and fixed costs incurred during the restoration. At KT Assur&Bank , we detail post-disaster compensation mechanisms to help you preserve your company's cash flow.
1. Why take out business interruption insurance?
A major disaster can cause:
- Temporary closure or heavy works
- Direct loss of turnover
- Fixed charges to continue to be paid (rent, salaries, subscriptions)
Without this guarantee, the company bears these costs alone and sees its cash flow dry up, which can lead to repayment difficulties or even the cessation of activity.
2. Elements of compensation
2.1 Lost turnover
The calculation basis is your average daily turnover , multiplied by the duration of the interruption. Sometimes the following are added:
- The margin variation if you have stock to sell after reconditioning.
- Exclusive contracts lost.
2.2 Fixed charges and contributions
Supported:
- Rents and rental charges
- Salaries and social security contributions
- Subscriptions (energy, Internet, etc.)
- Loans and financial interest
3. Scope and options of the contract
3.1 Compensation Period
- Initial period : generally 12 to 24 months; extension possible
- Waiting period : period without compensation (often 24–72 hours) before triggering
3.2 Possible extensions
- Service provision : loss of business due to supplier interruption
- ERP background : regulatory compliance costs
- Legal protection included to defend your interests if the origin of the loss is contested
4. Concrete examples
| Sinister | Loss of business | Fixed charges | Expected compensation |
|---|---|---|---|
| Warehouse fire | 15,000 €/month | 10,000 €/month | (15,000+10,000)×duration – deficiency |
| Shop flooding | 8,000 €/month | 5,000 €/month | same as per contract |
5. Best practices to optimize your compensation
- Accurately calculate your average turnover and your fixed costs
- Document evidence (invoices, balance sheets, bank statements) immediately after the disaster
- Check the clauses for the lack of guarantee and the limitation of the guarantee ceiling
- Update your data annually to avoid underestimating your needs
Conclusion
Business interruption insurance is a cornerstone of risk management for any business. By understanding how it works—scope, waiting period, and options—you can protect your cash flow against unforeseen events. At KT Assur&Bank , we help you choose and update this essential coverage to ensure the sustainability of your business.
👉 Contact us for a personalized study and a free quote for your business interruption insurance.