Business Interruption- FLOP & MLOP
What is a business interruption?
Business Interruption refers to a situation where a company’s operations are halted due to unexpected events, leading to a loss of income and increased expenses that affect the financial health of the business.
What is FLOP insurance?
Business Interruption Coverage:
FLOP insurance compensates the insured business for the loss of net profit and continuing fixed expenses during the indemnity period resulting from the fire incident, helping to maintain financial stability during the recovery period.
What does a business interruption policy cover?
- Profits – Based on prior months’ performance, a policy will provide reimbursement for profits that would have been earned had the event not occurred.
- Fixed Costs – These can include operating expenses and other incurred costs of doing business.
- Temporary Location – Some policies cover the costs involved with moving to and operating from a temporary business location.
- Extra Expenses – Business interruption insurance will provide reimbursement for reasonable expenses (beyond the fixed costs) that allow the business to continue operating while the business gets back on solid footing.
- Civil authority ingress/egress – A business interruption event may result in government-mandated closure of business premises that directly cause financial loss. Examples include forced closures because of government-issued curfews or street closures related to a covered event.
- Employee wages – Coverage of wages is essential if a business does not want to lose employees while shutting down. This coverage can help a business owner make payroll when they cannot operate.
- Taxes – Businesses are still required to pay taxes, even when disaster hits. Tax coverage will ensure a business can pay taxes on time and avoid penalties.
- Loan Payments – Loan payments are often due monthly. Business Interruption coverage can help a business make those payments even when they are not generating incom
What is MLOP insurance?
Business Interruption Coverage
Our Machinery Loss of Profits (MLOP) insurance can support you by covering these costs until the time you can resume regular operations. MLOP insurance covers the actual loss of gross profits sustained as a result of the business interruption caused by an accident that’s covered under Machinery Insurance.
What is not covered by a business interruption policy?
- Broken items resulting from a
covered event or loss (such as glass). - Flood or earthquake damage, which
are covered by a separate policy. - Undocumented income that’s not
listed on your business’ financial records. - Pandemics, viruses, or
communicable diseases (such as COVID-19).
FLOP (Fire & Allied Perils- Material Damage Scope:
Covers the financial impact of business interruption due to insured perils like fire, lightning, explosion, etc.
MLOP (Machinery Loss of Profit) Insurance Scope:
Protects against financial losses due to machinery failures that disrupt production.
