Business Interruption Insurance
Business Interruption Insurance covers lost income if a company experiences an interruption to it’s ability to conduct business as usual, including natural disasters, equipment damage and vandalism.
If a fire causes your facility to be temporarily unusable, what would you do next? Ideally, you would move to a temporary location while your permanent place of business is being repaired. Yet, traditional Property Insurance does not cover this move or a loss of income when a business must temporarily close. With Business Interruption Insurance, also referred to as Business Income coverage, this setback can be minimized by simply adding this coverage to your Property Insurance policy.
Do I need Business Interruption Insurance?
Continuity is critical in business, and there are few things more important than continuous revenue and cash flow, particularly for small to medium-sized organizations. In fact, just one brief business interruption can be incredibly costly for an organization, often leading to serious reputational damages or long-term closures.
Insurance experts estimate that Business Interruption Insurance is one of the most valuable coverages available, yet it is often overlooked by business owners. Since Property Insurance only covers the cost of physical loss or damage and contents of a business in the event of a disaster, Business Interruption coverage is invaluable for covering the loss of income while the permanent business location is being repaired.
Claims Scenario: You’re Fired
The company: A small, family-owned bagel shop.
The challenge: Following a recent fire, a bagel shop experienced major property damage. Not only were substantial repairs needed, the company lost crucial baking equipment.
Repairs for the damaged property and equipment were expected to take three months—a significant amount of lost time and revenue.
Business interruption insurance in action: Following a covered disruption, business interruption insurance can help businesses of all sizes stay afloat and recover quickly. This is because business interruption insurance can reimburse income organizations would have received had they been able to operate.
This was particularly important for the bagel shop, as paying for costly repairs and not having a steady flow of income could have bankrupted the business. With the right policy, organizations can take the necessary steps to get back up and running, all without sacrificing day-to-day income.
Claims Scenario: Relocation, Relocation, Relocation
The company: A mid-sized auto dealership.
The challenge: After a night of severe flooding, a number of area businesses experienced substantial water damage. Of these businesses, an auto dealership was hit the hardest, losing the majority of its inventory.
In addition, because the lot was flooded, the dealership had to move its operations to a new location. This, in turn, meant the dealership had to sign a new lease and cover steep moving expenses.
Business interruption insurance in action: In the face of a disaster or other disruptions, organizations may be forced to move locations in order to remain open. Without the proper policy, organizations would have to pay for these costs out of pocket.
Thankfully, business interruption insurance can reimburse organizations for all of the costs associated with a move.
What does Business Interruption Insurance cover?
Business Interruption policies provide protection against a variety of common interruptions including:
- natural disasters
- equipment damage
- supply chain disruption
- vandalism
Coverage can include:
Revenue – In the event of a disruption, business interruption insurance provides coverage for income your business would have earned during a closure period if it had been operating normally.
Rent or lease payments – Even if your premises are unusable following a disaster or other event, many leases still require that you make payments. Business interruption insurance allows you to continue making rent or lease payments, even while your business is not operating.
Operating Expenses, such as utilities, that must be paid even though business temporarily ceased.
Relocation – In the event that your primary location is unusable following a disaster or other event, you will likely have to relocate in order to remain open and continue generating revenue. Business interruption insurance can cover the expenses of moving your business to a temporary location and may include both moving and rent costs.
Employee wages – If you are unable to operate, it is likely you will not be able to continue paying employees. Business interruption insurance can help you avoid losing staff while you’re closed by ensuring that you make payroll.
Loan payments – If you have an outstanding loan, you will need to continue to make payments even if your business isn’t fully operational. Business interruption insurance will ensure you never miss a payment until you are fully operational again.
How much does Business Interruption Insurance cost?
Price of coverage depends on the risk of disaster to the premises. This may depend on the business location, nature of the business and how easily the business could function at an alternate location on a temporary basis.
We can do a risk assessment with you to determine the coverage you need.
Contact us today to learn more about the Business Interruption Insurance solution that’s right for you.
What types of Business Insurance do I need?
There are many types of insurance policies that our experts can advise you on and package to meet your specific needs, such as:
- Commercial General Liability
- Commercial Property Insurance
- Business Interruption Insurance
- Pollution Liability Insurance
- Professional Liability Insurance
- Product Liability Insurance
- Equipment Breakdown Insurance
- Commercial Auto Insurance
- Cyber Insurance