Business Interruption Insurance
What is Business Interruption Insurance?
Business interruption insurance (also known as business income insurance) is a type of insurance that covers the loss of income that a business suffers after a disaster. The income loss covered may be due to disaster-related closing of the business facility or due to the rebuilding process after a disaster.
Why Do You Need Business Interruption Insurance?
Business interruption insurance helps to put your business back on track. Business interruption insurance can help with: Loss of gross revenue and profit. Cover can help with loss of income while you’re unable to trade.
Are you covered for a business interruption?
With business interruption insurance your business will also be covered for employee wages. Business interruption insurance will also be able to cover payroll for employees so they can still be paid while the business is being restored back to prior loss conditions.
What is included in a Business Interruption Insurance Policy?
Compensation for lost income if business must vacate its premises as a result of disaster-related damage covered under a Property Insurance policy.
Covers the profits that would have been earned based on previous financial records, had the disaster not occurred.
Covers operating expenses, such as utilities, that must be paid even though business temporarily ceased.
Covers expenses of operating in a temporary location while repairs to the permanent location are completed.
Business Interruption Insurance cannot be purchased on its own; it must be added to a Property Insurance policy or included in a Business Owner’s Insurance policy (CGL).
Policy limits should be sufficient enough to cover a large amount of time to rebuild the permanent business space and reestablish pre-loss levels of revenue. The business must be closed for several days (typically 48-72 Hours) before coverage begins, and it does not pay for those days retroactively.
Price of coverage depends on the risk of disaster to the premises. This may depend on the business location, on the nature of the business and how easily the business could function at an alternate location on a temporary basis.
Business experts estimate that business interruption insurance is one of the most, if not the most, valuable coverage available, yet often overlooked by business owners. Since property insurance only covers the cost of physical loss or damage and contents of a business in the event of a disaster, business interruption insurance coverage is invaluable in covering the loss of income while the permanent business location is being repaired.