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You are here: Home / work / How can you recover lost profits when there are no profits associated with R&D?

How can you recover lost profits when there are no profits associated with R&D?

September 6, 2014 by Hutson Resource Group Leave a Comment

Mentor-GraphicsWhen a fire destroyed the Mentor Graphics R&D center in Moscow, no one knew what was recoverable under the policy. How can a high-tech company recover lost profits when there are no profits directly associated with R&D?

If a business has an R&D segment, having R&D business income coverage is an excellent idea. Many R&D ventures produce no direct sales or profits, and normal operating expenses are absorbed by the company. After a loss at an R&D facility, like any other business interruption loss, there are expenses that continue to accrue (like payroll, rent, utilities, insurance) but that provide no benefit to the company because normal R&D activities are on hold. With the right R&D coverage, the ongoing expenses can be recovered.

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