FAST
SPECIALISTS
Business owners are busy people with many tasks on their to-do list, but they sometimes forget to protect themselves against the unexpected.
Being without business interruption insurance means that the slightest hiccup in cash flow can put the company at risk. In general, business owners do not adequately insure themselves against income risks.
What is business interruption insurance?
Business interruption insurance is a type of business property insurance that protects against loss of income resulting directly from the loss, damage, covered loss, or destruction of the insured property. It could be a fire started in a restaurant oven or a windstorm that destroyed the roof of a commercial building.
Most insurers offer a form of business interruption insurance that covers your income until your business returns to its normal level, which is the level of revenue that existed before the unforeseen event that caused the sudden loss.
How much does it cost?
Business interruption insurance is typically sold as part of a business owner’s insurance policy. The cost usually varies depending on the company’s turnover. These elements are taken into account in the annual cost:
- Industry
- Company size
- Coverage limits
- Location
What does business interruption insurance cover?
The most common business interruption insurance claims are related to risks such as:
- vandalism (if the damage prevents you from functioning normally)
- bursting pipes
- Windstorms
- Fires
Natural disasters like floods and earthquakes, which aren’t typically covered by a commercial property insurance policy, probably won’t be covered by business interruption insurance either, but you can certainly add coverage for these items to your policy. These are called endorsements, and they are useful.
Policies can vary wildly between what they cover and what they don’t. You need to know if the policy you are purchasing is Named Perils or All-Perils. What’s the difference? The “all perils” policy protects against any perils that are not specifically mentioned in the exclusions, while the “named perils” policy only covers the list of designated perils in the policy.
Once your claim has been accepted, you can expect a standard business interruption policy to typically cover the following costs:
- Loss of profits
- Wages
- loan repayments
- Rent or mortgage payments
- Repairs
- Construction for reconstruction
- Equipment rental
- Temporary Relocation Expenses
- Taxes
- Formation
Make sure your business interruption insurance is up to date with your business’s revenue. Some policies have an income cap, and your business could make more money in a few years than it does today.
