Business interruption insurance provides financial protection for a business when it cannot operate. It is an important form of business insurance. It can help to replace the income lost as a result of a covered event.
Business interruption coverage may not sound like an important investment. But, it could mean keeping your business operational long term.
When Does Business Interruption Insurance Apply?
Business interruption insurance usually applies to situations where the business cannot operate for a period of time. This may include instances such as a natural disaster or fire. It often will not cover instances where the owner failed to maintain equipment or, in some cases, flooding. Your policy will specifically outline the types of instances when it applies. Generally, these instances are disaster-related.
When Does It Apply?
Most of the time, business interruption insurance does not cover a single days’ outage. It may step in to provide you with financial protection once a specific period of time passes. This is often 48 hours. Those first 48 hours are generally not covered by the business insurance.
How Much Does It Pay?
This depends on various factors. The insurance company will work with you to determine how much income you lost during the shuttered period. If your business closed for a week due to a covered claim, the insurer will estimate the amount of income your company was likely to produce during that time.
You may also want to consider an extra expense coverage. This can help to extend how much financial protection your business receives. This can help you to avoid having to shut down your company during a significant restoration period. It may provide sufficient coverage without the need for business interruption coverage.
Why Do You Need It?
Why invest in this type of coverage? Most businesses can withstand closing for a day or two. You may have the financial means to cover this.
Yet, when an extended period of closure occurs, you may have trouble maintaining costs. You are still responsible for paying your vendors. You may need to pay employees so they do not move on to another job. You may need to pay other costs to keep your business sound even though your company is not making any money. Business interruption insurance covers these types of losses.
Nancy K Agency can help you get a fast, free business insurance quote that fits your needs. Call us at 512-871-0864 for more information.