Business Interruption Insurance
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.
What Is 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:
- Lose power thanks to a storm and are unable to operate your equipment and serve
- Lose access to a provider's services because the provider loses power due to a natural
disaster or other event
- Face property damage from certain sources that prevent you from operating normally
- Suffer fire damage that prevents you from using your equipment or business premises
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.
Why Do I Need Business Interruption Insurance?
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:
- Employee salaries
- Utility bills
- Loan Payments
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.
Protect Your Business from Natural Disasters and More
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.
Tailor Your Business Interruption Insurance to Meet Your Business Needs
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.
Compare Business Interruption Insurance Costs and Quotes
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.