A key element in keeping any business running if some kind of disaster or substantial loss happens to your company is having the right business insurance coverage.
A well-written business owners insurance policy provides coverage for losses such as physical damage to property, loss of equipment and inventory, and similar costs.
As a business owner, you could really lose out if you don't think ahead about the costs associated with keeping your company going while recovering from a loss.
It is during these times that business interruption insurance becomes a critical factor in the survival of your company.
What Is Business Interruption Insurance?
Business interruption insurance is coverage that pays benefits when your company has suffered some kind of loss that prevents you from doing business and generating income while repairs are being made.
Whether your company’s ability to function has been temporarily halted by a fire, hurricane, or some other covered event, this coverage is available from business insurance agencies can make the difference between rebounding and continuing to do business or having to close the company no matter what amount of coverage you have for actual physical damage.
What Happens When Business Disasters Occur?
The obvious losses when business disasters happen are the physical losses to buildings, office equipment, production equipment, inventory, supplies, and any other physical items owned by the company.
Typically, all of these things are covered in one way or another under the standard business insurance coverage.
The not-so-obvious losses that your company could face after suffering some kind of disaster are the monetary losses associated with the inability to resume doing business until all physical damage has been repaired, equipment and supplies have been replaced, and more.
Because your business cannot just resume normal operations the next day, this leaves you in danger of not being able to cover your bills while attempting to get up and running again.
How Does Business Interruption Insurance Work?
Business interruption coverage is a critical insurance that can actually save your company by replacing the lost income necessary to keep the company afloat during periods of rebuilding that are covered by your other insurance.
Business owners insurance interruption coverage provides benefits to cover the following costs and expenses while your company is not able to generate income and will in turn keep your cash flow positive:
- Lost Revenue - The income your business would normally be bringing in while in full operation.
- Employee Salaries - Lets you keep paying your employees during recovery.
- Taxes - Lets you keep up with tax responsibilities and payments.
- Loan, Rent, and Lease Payments - Prevents defaulting on any money owed while the business is not generating income.
- Relocation Expenses - Pays for costs associated with moving your operations to a new facility while repairs are being made.
- Contingent Business Interruption - Is available when a supplier’s business loss affects your ability to generate income.
- Civil Authority Coverage - This pays when the government puts access restrictions on your building that prevents your business from generating income.
Business Interruption Insurance - Essential Coverage
A disaster that prevents your company from operating normally can be a devastating blow to not just your profitability but also your ability to survive post-disaster.
Business interruption coverage when written by your business insurance agency will help your company get back on its feet by covering all the expenses you can’t pay while no income is being generated.
While there are some exclusions to these add-on policies, in most cases this coverage can vital to making sure you have a Grand Re-Opening and not Going Out Of Business Sale!