A Business Owner's Guide To Business Interruption Insurance
Every small business requires proper insurance. Some types of insurance, such as a liability policy are required by law, while other types, like business interruption insurance, aren't required but make smart financial sense. The following can help you better understand how business interruption insurance can help you.
Why do you need business interruption coverage?
Chances are you have insurance that will cover your physical losses in the event of a fire, flood, storm damage, or major theft. These types of situations typically result in more than just the loss of a building, product, or equipment, though. You will also lose out on business income until repairs are made and replacements are brought in, which can take from days to weeks. Business interruption coverage provides allows you to make a claim for the period of time you are unable to operate your business during the loss so that you won't suffer and devastating loss of income. This can mean the difference between surviving a hardship or going out of business.
What does the policy cover?
These types of policies typically cover business interruption for reasons that overlap your property or general business coverage -- theft, vandalism, storms and "acts of God," floods, and fire. Every policy varies slightly, so you will need to work with your insurance agent to find the policy that covers the types of issues that are most likely to affect your business or geographical reason.
Are there any time limits?
The most common policy limitation is time-based. Most business interruption policies only provide a payout for a finite period of time, such as one year. There may also be minimum time requirements for an interruption. For example, the policy may not cover a short one or two-day interruption due to the repair of blown water main, but it will cover a two-week interruption if the broken main results in flood damage that needs to be repaired. In some cases, there are no time limits but there is a payout ceiling on the policy.
What isn't covered?
Generally, coverage is limited to interruptions caused by damages. If you have to shut down for a week due to illness of the owners or staff, for example, a standard business interruption policy won't cover the loss. There are other policies, such as self-employed sickness or disability policies and loss of income policies, that are designed for these scenarios.
For more help, contact a commercial insurance agency today.