The majority of businesses that have fire/property insurance cover also have business interruption insured.

Business interruption insurance only covers the net profit of the business.

Accounting Gross Profit equals Insured Gross Profit.

Before using the financial accounts provided by the Insured, it is wise to double-check the name of the entity on the accounts to ensure that you are calculating the Sum Insured for the entity that you think you are, and to ensure that you are using the most recent set of accounts available.

All business expenses are variable over the long-term.

The only expenses that need not be insured are those that are truly variable in direct proportion to sales.

When you are determining which expenses are truly variable in direct proportion to sales, as a rule of thumb you should consider what would happen to the expense if the building occupied by the business was totally destroyed.

There is no need to make adjustment for opening and closing stock when setting a Sum Insured or Declared Value for Insured Gross Profit.

With a start-up business or an existing business under new ownership and/or management, it is good practice to use the budget as the starting point to work out an adequate Sum Insured or Declared Value for Insured Gross Profit.

The last day of the financial year of the business is the very best day for the insurance program to fall due, when it comes to calculating the Gross Profit figure for business interruption cover.

Which of the following need to be considered when determining the growth factor to use in setting the Sum Insured or Declared Value for Insured Gross Profit?

Selecting too short an Indemnity Period is another form of under-insurance.

Where the Insured only wants a short Indemnity Period, say 3 months, you should set the Sum Insured or Declared Value using 3 months of the expected Gross Profit, not the full 12 months.

The insurance adviser should familiarise themselves with the terms contained in the building lease agreement.

When in doubt, it is recommended that a short Indemnity Period be selected over a long Indemnity Period.

If the Insured is loathe to pay premium for business interruption insurance, they should take a short Indemnity Period to save money.

It is recommended that 10% be set as the Additional Increased Cost of Working sub-limit or Sum Insured on all policies.

It is recommended that 10% be set as the Claims Preparation sub-limit or Sum Insured on all policies.

There is really nowhere to go to get assistance working out the Sum Insured for larger, more complex clients.

BIcalculator.com provides educational material and coaching on how to accurately set a business interruption Sum Insured or Declared Value for many policies available in the Australian and New Zealand markets.