BI is more than just the insurance of Gross Profit. Cover is automatically provided for Increased Costs as part of the Gross Profit item. But there are limitations to what can be claimed under this item – often referred to as Item 1(b). What are the “tests” that need to be satisfied for an extra cost to be covered under Item 1(b)? Why is it recommended that BI policies have the separate item of cover for Additional Costs? It might be called “Additional Costs” or “Additional Cost of Working”, but most frequently it is called Additional Increase in Cost of Working (“AICOW”). Whatever it is called – it is the wording that is important.
- Review actual policy wordings.
- Explain the differences with the policy wordings for Item 1(b) increased costs (under the Gross Profit item), and the separate item of cover “Additional Increase in Cost of Working (often referred to as “AICOW”).
- Discuss the “tests” that need to be satisfied to claim extra costs – under both Item 1(b) and also AICOW.
- Discuss how to set an appropriate level of cover for AICOW?
- With examples, discuss the sorts of costs that cannot be claimed
- Insuring for AICOW only, with no Gross Profit or Gross Revenue cover.
Mark has been a senior business interruption consultant with Commercial Loss Management since 2003. Commercial Loss Management specialises in acting for insureds to prepare their business interruption claims. He began his business interruption career in 1988, having worked as a Senior Loss Adjuster and then as a Director and Senior Business Interruption Consultant with a specialist Business Interruption consulting firm in Auckland.
Mark has a keen interest in education, training and professional development. For six years, he was an examiner in Business Interruption and has lectured on this subject throughout the country including presentations to brokers continuing education seminars since 1993.
He is a Chartered Accountant and has a Bachelor of Commerce degree. He is an Associate of the Australasian Institute of Chartered Loss Adjusters and the Chartered Institute of Loss Adjusters (UK), a Senior Associate of the Australian and New Zealand Institute of Insurance and Finance and a FUEDI European Loss Adjusting Expert.