The cost of adding business interruption insurance to your commercial property insurance or business owner’s policy (BOP) depends on the value of your business property, among other factors.
Business interruption insurance covers lost profits, loan payments, and day-to-day operating expenses when you have to temporarily shut down your small business due to a covered peril.
Covered perils include fires, vandalism, and other causes of physical damage covered by your property insurance policy. One exclusion is a pandemic, as business interruption coverage does not provide protection against communicable diseases.
The cost of adding business interruption insurance, also known as business income coverage, to your commercial property insurance varies significantly based on the type of business you have and the risks you face.
Business interruption insurance coverage helps pay for lost income, rent or relocation costs, and other expenses when you are forced to temporarily shut down your small business due to a covered physical loss.
Several factors influence the cost of business interruption insurance. Specifically, your insurance provider will look at:
When a covered incident forces your small business to close, business interruption insurance can cover lease payments and, if necessary, the cost of rent for a temporary location. If your business occupies a valuable commercial property, your policy limit and premium will likely be higher to match the potential cost of a claim.
Businesses that earn more will likely also have a higher premium. That's because business interruption insurance compensates small businesses for income loss due to a temporary shutdown from a covered loss.
Your industry is another factor that will impact your business income insurance rates. Generally, high-risk industries pay higher premiums compared to low-risk industries.
For example, businesses where an interruption would result in bigger financial losses, such as computer repair, will likely pay more for business insurance.
Companies can choose higher coverage limits on commercial insurance policies to potentially receive a higher payout on a claim, and to avoid having to pay costs out of pocket. But if you want more extensive coverage, you’ll need to pay higher premiums.
To increase coverage, you can also add endorsements to your business interruption policy. For example, extra expense coverage can pay for less common expenses, such as hiring temporary workers during a shutdown. You could also add contingent business interruption insurance, which covers losses when a primary partner or supplier is forced to close.
Any insurance claims you’ve made in the past on your business interruption insurance policy will likely result in a higher premium in the future.
Your insurance carrier will also consider your geographical location when calculating your business interruption cost.
If your business property is prone to environmental risks that could result in extensive property damage, such as natural disasters like flooding or windstorms, you may have to pay more. Additional factors, such as local laws and land value, can also influence your premium.
Policies with higher deductibles cost less, but you’ll have to pay that amount before you can collect on a claim.
There are things you can do to keep your business interruption insurance policy costs low.
Some strategies include:
When you purchase business interruption insurance, you can pay your premium in monthly or annual installments. Paying your premium annually usually costs less than monthly payments.
Choosing a higher deductible is an easy way to save on your premium, but make sure to choose a deductible you can still afford. If you can’t pay your premium, you won't be able to collect on a claim.
Small businesses with no previous claims on their insurance can expect to pay less for business insurance. While some business interruptions are inevitable, you can avoid claims by managing your risks.
Liability claims can be a threat to your tech business. If you’re accused of injuring someone, damaging property, or causing other harm it could easily turn into a costly lawsuit. That’s why it's important to have the right insurance protection in place to cover a range of potential liability risks.
TechInsurance is a trusted insurance expert for small businesses, including contractors and consultants, with extensive knowledge of the IT sector. We help small business owners get quotes from top-rated insurance carriers, buy policies based on their business needs, and manage coverage online.
By completing TechInsurance's easy online application today, you can compare free quotes for commercial property insurance and other types of coverage from top-rated U.S. carriers. Our insurance agents are available to help answer any questions you may have.
Once you find the right policies for your small business, you can begin insurance coverage in less than 24 hours and get a certificate of insurance for your small business.
Insurance premiums vary based on the business insurance policies a business buys. View our small business insurance cost overview or find out the average costs for other common types of insurance.