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What would you do if a storm knocked the electricity to your business and prevented you from serving clients for a day or more? Or what if your building was burglarized and all your equipment was taken? These and other events can destroy your ability to serve clients and bring in revenue, which can have a major long-term impact on the viability of your business.
Luckily, Business Interruption Insurance offers financial protection if and when an event beyond your control prevents you from carrying out business operations as usual. Read on to find out how you can protect your business from the unknown with Business Interruption Insurance.
Business Interruption Insurance works by providing income to your business when an external force prevents you from operating normally. For example, you might be able to collect on your Business Interruption policy if you:
Business owners interested in purchasing Business Interruption Insurance can add it on an existing policy (often a Business Owner’s Policy) as a rider. It cannot be purchased as standalone coverage.
Like all types of liability insurance, Business Interruption Insurance allows you to protect your business against the unknown: by investing a small amount of money in the present (in the form of a premium), you ensure that you won’t lose a large amount of money in the future (as a result of an event that prevents you from operating).
Unlike other types of liability insurance, however, Business Interruption Insurance secures the actual revenue that allows you to pay your employees and support your family. While other types of business insurance protect the people and things you need to bring in revenue (including customers, employees, and equipment), Business Interruption Insurance protects the revenue itself.
Think of it this way: if your office burned down in a fire, your Property Insurance policy would cover the cost of purchasing new equipment and renting a new office space. During the time you relocated and reestablished operations, though, you wouldn’t be bringing in any revenue – but you’d still be responsible for a number of costs, including:
With a Business Interruption Insurance policy in place, you would receive payments from your insurance provider with which you could cover your operating expenses until you were able to start serving customer again.
NASA has noted that increasing global temperatures have already led to a rise in the number of extreme weather events we see worldwide, and it predicts more of the same in coming years. What does this mean for your business? More chances for interruption from floods, fires, power outages, and electrical storms.
Keep in mind, too, that even if your business isn’t harmed by a natural disaster, damage to one of your suppliers or partners could prevent you from carrying out your work. Business Interruption Insurance protects you whether damage happens to your business or someone’s on whom you rely.
In order to secure a Business Interruption policy that meets your business’s needs, you’ll have to show documentation of your income. Most policies offer benefits based on the amount of income you bring in every month.
If you’re currently in a period of growth, for example, you’ll want to document your income over a period of several months so that any benefits you collect allow you to continue expanding at your current rate.
Talk to an insurance agent familiar with working with businesses in your industry to determine how to further customize your Business Interruption coverage.
Ready to find out how much you can expect to pay for Business Interruption Insurance? Complete an online insurance application today or call one of our agents to receive free quotes for Business Interruption Insurance. Remember: Business Interruption coverage is available as an add-on to General Liability Insurance and Business Owner’s Policies.
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