Business Interruption Coverage

On Point.

Business Interruption Coverage is critical for most business owners, but it’s the least understood.

Why do business owners need Business Interruption Coverage? Many small businesses are not insured if something happens where they need to temporarily close due to a claim – it’s not something they often think about. Temporary closures can happen due to a fire, a flood, a break-in attempt forcing companies to halt business for a few weeks, months or more while repairs are made. That period often stalls, or seriously reduces cash flow and places stress on business owners to pay bills and their employees during that period.

What exactly does Business Interruption Coverage protect? Business Interruption Coverage can protect your business from income loss or a drop in cash flow due to an insured disaster, damages, or destruction of your business’ physical location. This could be something such as a heavy hailstorm that destroyed your roof, a break-in attempt where your equipment was stolen and supplies were damaged, or a fire that has made your building unsafe to enter.

The majority of commercial insurance providers offer some form of Business Interruption Coverage. This coverage can offer compensation for your revenue until your business can reopen to full capacity. It will offer revenue compensation of the same average amount you generated prior to the loss – and it will helps in retaining your people while they cannot produce.

Which business are you?

How is the cost of Business Interruption determined?

The cost of Business Interruption Coverage is based on factors like your location, the size of your company, the industry you work in, and the coverage limits that you choose. Business Interruption Coverage may be sold as a component of your commercial insurance policy.

For example – your location may lower or increase the cost of business interruption insurance – especially in areas that experience extreme weather, higher crime rates, and other variables that may pose greater risk to a temporary closure.

What exactly can Business Interruption Coverage protect?

If a claim due to an insured loss is experience, business interruption cover typically covers the following:

  • Taxes

  • Ongoing training or orientation expenses

  • Rental equipment

  • Rental equipment

  • Rental equipment

  • Rent or mortgage payments

  • Relocation expenses

Business Interruption Coverage will generally come into play if you are covered under a ‘named peril’ in your policy – such as vandalism, theft, high winds, hailstorms, burst pipes causing water damages, and fire.

Are there any additional Business Interruption Coverage extensions available?

Yes, you may have an “extensions of coverage” section in your commercial policy for things like;

  • Contingent Business Interruption (i.e coverage against damages, destruction, or loss for property that is owned by others).
  • Civil or Military Interruption (i.e loss sustained by the business owner due to lack of access to building premises due to prohibition from civil authority or military).
  • Service Interruption (i.e coverage for damage, destruction ,or loss to any gas, water, telephone, steam, electrical, or other services transmission lines, substations, and utilities).

Business Insurance – 2 Minute Insights

Common Commercial Insurance Categories

Real Estate Developer

Retail Enterprise

Contractor

Manufacturing

Garage Repair Shop

Professional Services

Medical Services

Lawyers & Law Firms

Fleet & Commercial Auto

Wholesaler / Distributor

Landlord / Rented Dwellings

Food & Beverage