Business Insurance

What is business interruption insurance (and does my business need it?)

Most business owners would probably agree that a major worry is having to close the doors temporarily due to a fire or any other loss. Experiencing a business interruption throws everything into chaos. Of course, you have property insurance to help you get back on your feet and cover the expenses of repairs or rebuilding.

But here's the kicker:

Property insurance will most likely not cover moving to a temporary location should you need to close for a short time. What's more, property insurance also probably won't reimburse you for the income you lost while you were closed.

However, there's good news:

Business interruption insurance (or business income insurance) can help your business weather a loss that forces you to definitely close your doors, for example a fire, vandalism, natural disasters, and equipment damage. While it's often forgotten and neglected, business interruption is a very valuable kind of coverage.

Let's see what it's all about.

What does business interruption insurance cover?

We mentioned before that business interruption insurance can help you if you ever have a covered loss that forces you to definitely close your doors. Each policy is different plus they can get just a little complicated, so it's important to talk to a trusted insurance professional when seeking business interruption insurance coverage.

Anyways, that disclaimer said, here are a few of the things business interruption insurance could do for your business.

1. Reimburse you for lost income.

Obviously, in case your doors are closed, you aren't generating any cash for your business. And that can turn into a problem really quickly. Business interruption insurance would give you the income you'd have earned if you had been in a position to operate normally. That way it's not necessary to worry that you are not bringing in any profit.

Something to become conscious of – the coverage may not kick in for a couple of days following the initial closure, and it usually doesn’t work backward to cover those days.

2. Expenses of relocating.

Most likely, facing a loss that forces you to definitely close your doors means that you will need to relocate and implement Plan B so that you can try to resume business operation. Business interruption insurance may help you cover the price of moving and rent, depending on the coverage you have.

3. Paying your employees.

With no money being made, how are you supposed to pay the people who work for you? It would probably be considered a little difficult. And if you can't pay people-well, they probably won't be too excited to stick around. Business income insurance will help you retain your employees since it may offer their wages.

How do I get business interruption insurance?

Okay. You're probably wondering:

How can one start getting some business interruption insurance?

Well. You can add it to a property insurance policy or a business owners' policy. So, there's that. And again, it's really vital that you consult with a trusted insurance advisor when you are going through the process of adding this coverage to ensure you get the policy that's right for you.

How much business interruption insurance do I need?

Every business is unique, so every business will need a different quantity of coverage. There are a few things to consider and discuss with your agent…

  • Your monthly overhead expenses
  • The cost of operating your company out of a temporary location
  • Whether you’re within an area that’s prone to natural disasters
  • How long it might take you to get back to normal following a disaster or fire
  • Whether you have a sprinkler system for your building

How much does business interruption insurance cost?

And now for the million-dollar question of purchasing business insurance:

How much does business interruption insurance cost?

The price depends on a few factors, including-

  • Your location
  • The kind of business you have
  • How easy it might be for you to resume operation out of a temporary location
  • Your risk of facing a loss that would force you to definitely close

The easiest way to obtain an accurate idea of how much business insurance costs is to get a quote (or multiple quotes.) Each business is different, meaning that every business is going to pay another price for his or her insurance. By obtaining a quote you'll know how much it might be for your business.

So. That's business interruption insurance in a nutshell. If you are interested in finding out more about it or if you'd prefer to get business insurance quotes, all you need to do is give us a call or complete our online form. We would be pleased to help you with your insurance needs.

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