When you are running a business, it’s important to protect yourself from unexpected losses. Business interruption insurance can help ensure that your company continues to earn income when the unexpected happens.
If a business is shut down for any reason, a business interruption insurance policy would replace the income that is lost.
Business interruption insurance is a policy that provides financial coverage for lost income when your business suffers an insured loss. If your business is shut down for any reason, this type of policy will replace the income you lose during the time it takes to get back up and running.
What does business interruption insurance cover?
Business interruption insurance covers lost revenue from factors including:
- Natural disasters such as hurricanes or earthquakes (providing they’re not caused by terrorism)
- Workplace violence such as shootings or stabbings (again, not acts of terrorism)
- Fraudulent acts like embezzlement and theft (which can be committed by employees or customers)
It does not cover damages to buildings or equipment from the disruption.
Business interruption insurance does not cover damages to buildings or equipment from the disruption. In other words, it does not pay for repairs to your office space, machinery, or inventory if they are damaged during a disaster. This is simply because such damages fall outside of the scope of business interruption insurance.
To understand why this is so important, we need to look at what exactly business interruption insurance covers. It’s designed to reimburse you for lost revenue incurred as a result of an unforeseen event that prevents your business operations from continuing normally for an extended period of time—often more than a month up until two years (but there are exceptions). If you’re in an area prone to flooding and damage due to hurricanes every year, then having some form of coverage may be appropriate—but only if it offers protection against being shut down completely by these natural phenomena over time without any prior warning signs beforehand (like earthquakes).
The coverage applies to events such as vandalism, theft, fire, storm damage and other perils listed in a policy.
The coverage applies to events such as vandalism, theft, fire, storm damage and other perils listed in a policy. The policy will typically reimburse you for lost revenue if your business is unable to operate due to the insured event. For example, if your business is closed for three days after vandals break windows in your store and spray paint graffiti over the walls, you may be eligible for compensation under this type of policy (assuming there are no exclusions related to vandalism). The coverage does not cover damage to your building or equipment; nor does it apply if you’re operating at a reduced level because of natural disaster or acts of war.
Policies can be designed to cover any loss of business income that results from the interruption of operations.
Business interruption insurance policies can be designed to cover any loss of business income that results from the interruption of operations. Coverage could include additional expenses, such as employee wages, rent on other premises and moving or temporary equipment costs.
The important thing to remember about this coverage is that it’s only for when your business is interrupted by a covered cause of loss—and not just because you’re experiencing financial problems.
Coverage may include additional expenses, such as employee wages, rent on other premises and moving or temporary equipment costs.
If your business is forced to close for an extended period of time, there are many costs that you will incur. These include but are not limited to:
- Employee wages if they must be paid during the business interruption period. If a portion of your workforce is required to continue working on projects while other employees are offsite, you may be able to claim back some or all of their wages from your insurer.
- Rent on alternative premises if the nature of the claim means you need to relocate temporarily. This may be necessary if there is damage done by fire or flooding that requires immediate relocation for safety reasons, for example. It could also apply if additional space becomes necessary because some parts of your building have been rendered unusable due to storm damage, theft or vandalism. The cost of paying rent will potentially be covered by this type of insurance policy so long as it’s reasonable and related directly back into repairing any damages caused by such acts being carried out against them; otherwise it would simply fall under basic property insurance policies which have different rules regarding what’s covered
It is best to speak with an agent or broker about different types of business interruption insurance policies.
If you are not sure what type of business interruption insurance policy your company needs, it is best to speak with an agent or broker. Your agent can explain the purpose of business interruption insurance, and they can help you understand the different types of policies available.
In general, there are two main types of business interruption insurance:
- Property damage – This type of policy covers losses that occur because a covered peril causes physical damage to property owned by the insured company. For example, if a tornado rips through your building and destroys some equipment, this coverage would pay for repairs or replacement cost up to the amount specified in your policy.
- Income loss – This type of policy reimburses you for lost profits after any covered incident causes one or more workers at your company to be unable to perform their usual duties due to injury or illness (including mental illness).
Business interruption coverage can protect your company’s finances in case you have an unexpected loss of income.
Business interruption coverage is a type of insurance that can protect your company’s finances in case you have an unexpected loss of income. The purpose of business interruption insurance is to cover the costs associated with lost revenue when your commercial property is damaged and unable to operate as normal.
Business interruption coverage might be an add-on to your property insurance policy or it might be purchased as a standalone policy. If you have both types of policies, the total amount for each can’t exceed 90% of your building’s replacement cost. If you don’t have any property damage protection at all, then this additional product should definitely be part of your overall risk management strategy!
The most common way for businesses to obtain business interruption insurance is through their general liability policy; however, it’s also possible to get this coverage through separate policies like those offered by AIG or Travelers Insurance Group Inc., among others.”
By speaking with an agent or broker, you can learn more about business interruption coverage and how it can benefit your company.