Business Interruption Insurance 101

We know that most business owners have a lot of insurance questions, especially in this current climate. Many companies want to know more about business interruption insurance. Our experts have the answers you have been searching for information that can help you make smart decisions.

Here is what you should know:

What is business interruption insurance?

It takes hard work, sacrifice, and dedication to build a successful business. Whether you are a business owner or a prospective business owner, you should protect your investment.

Business interruption insurance replaces the business income lost by an insured in the event of a disaster that affects the business. Risks such as fire, floods, and property damage can force a business to shut down for restoration. A business interruption insurance policy is designed to help you recover lost income until you can operate again after a covered loss.

It can be difficult to determine how much coverage you need when it comes to business interruption insurance – a licensed agent can help. Keep in mind that you will be required to pay for extra expenses out of your pocket in case business interruption costs go beyond the coverage available.

What the policy covers

Before purchasing business interruption insurance, you will need to know what your policy covers.

Lost revenue

When your business can no longer maintain sales due to property damage, the insurance company will reimburse the profits you would have made had the insured event not happened. The payout will be based on the performance of your business in the past months.

Relocation costs

Some policies will cover moving costs to a new location after business interruption. These costs may also include fixed costs such as operating expenses and some of the other costs you incur when doing business.

Civil authority 

Apart from fire and weather damages, your business may incur financial loss resulting from a government-mandated closure of your business premises. Covered events might include street closures and government-issued curfews.

Commission and training cost

Depending on the extent of damage to your property after a business interruption event, you may need to buy new machinery and retrain personnel to use it. Business interruption insurance may cover the associated costs, making it easy for you to quickly recover from financial loss.

Employee wages and loan payments

To retain your talented employees over the period you are not in operation, you will need to meet your payroll obligations. This coverage can cover the cost of payroll, so you do not lose your staff. The policy can also help you make loan payments when you are not generating income.

Taxes

A temporary disruption of business operations can put you in a difficult financial situation. However, you will still be required to meet your tax obligations. Business interruption insurance can provide the funds you need to pay taxes to help you avoid penalties.

What the policy does not cover

There are several items that this policy will not cover. These include property damage, losses resulting from the temporary or permanent shutdown of a business you depend on, losses related to other incidents, and extra expenses that are not within your normal operating costs.  Losses caused viruses and bacteria are often excluded as well. A licensed agent can help you understand the policy coverages and exclusions.

Working with a reliable insurance company will assure you that your business is protected. Once you are ready to purchase business interruption insurance, contact usfor a policy that will meet your needs.