In the event of a natural disaster, fire or other circumstance that renders your place of business unfit for use, business interruption insurance can help. Although it is often regarded as one of the most valuable types of insurance that a business owner can have, it is easy to overlook including it in your business insurance policy. This can have serious dire consequences for your company.
As with any type of insurance, it is important that you are aware of your eligibility to collect compensation. This can help you avoid losing the money that can come from your insurance coverage. Read on to learn more about what business interruption insurance is and what it can do for your company.
What Does Business Interruption Insurance Cover?
Your coverage will vary depending on your particular policy, but most business interruption insurance covers the following:
Lost Income as a Result of Damaged Property – The damage may be a result of an accident, vandalism or natural disaster. Compensation for these earnings is based on your past financial records. For instance, if you run a printing company and your printer is damaged as a result of certain natural disasters, you are likely to lose money while it is being repaired or replaced. Business Interruption Insurance can compensate you for these lost profits.
Expenses Associated with Pperating the Business – These expenses may be incurred while your business is temporarily shut down. Even if you cannot use your business property, it is likely to still be incurring operating expenses and other costs. These can be covered by your insurance policy and will be compensated based on historical expense data.
Temporary Operating Expenses – If you are required to do business in a temporary area while your original location is being repaired, your expenses associated with this move may be covered. For example, if a fire breaks out in your office and renders the building unusable, business interruption insurance may pay the rent for your temporary office as well as other expenses incurred in your new area of operations.
Extra Expenses – This includes compensation for expenses that are not fixed, but which allow your company to continue operating during the repair process. These expenses may include things such as renting a piece of equipment so that your business can stay open.
What is the Length of Coverage?
The length of time your insurance company will provide compensation is determined by your policy and the length of the business interruption period. This period is typically defined as beginning on the date the disaster occurred and ending when the property is repaired to the same condition it was in before the damage took place.
If you have questions whether something is covered in your business interruption insurance policy, first consult the paperwork you received from your agent. If you still have questions, contact your insurance agent. He or she can tell you for sure what is covered.
Having a good business insurance policy that includes business interruption insurance is an important part of being a responsible business owner. Make the most of your policy by keeping good records and staying up-to-date on changes in your coverage.