Business interruption is not something that anyone ever wants to happen, but there are instances where it is unavoidable. That is why Business Interruption Insurance exists.
Unlike property insurance which only provides protection for damage to physical items and property, business interruption policy covers the profits that would have been earned had the event not taken place.
An example of when this type of policy is usefull is when a near by business had a fire and your business was also damaged to the point of having to close. It’s very clear that your company will not be back on its feet for a while. You will most likely suffer hardship with the loss of income while rebuilding or repairing your location. Another delay may be having to wait for inventory or important equipment that your business needs to function. With business interruption insurance, the policy would reimburse your company for any resulting profit loss as a direct result of the fire.
The following are also often covered by most policies:
- Fixed Operational Costs
These will include items like rent or utility bills
- Temporary Relocation Expenses
Some policies cover moving to a temporary place to operate
- Unforeseen Expenses
Reimbursement for expenses that are incurred outside of any fixed costs that allow the business to continue to operate while the location is repaired.
Every business is different and thus the amount of needed coverage will be as well. Some items to examine when determining your coverage.
- How likely is it that a covered event will occur?
- Is there a fire sprinkler system and is it up to date and functional?
- Do you operate in a region that is disaster prone?
- How available is temporary commercial space in your area?
Last but not least, estimate the time it will take to rebuild your business location. This estimate will be used to determine how much profit you may lose during the shut down.
If you are looking for the protection of a Business Interruption Insurance policy please reach out and we can help you determine what the best coverage will be for your business