You’ll want to do all you can to protect the interests of your business. And while things like accident insurance and cybercrime insurance are often talked about, it wouldn’t be an exaggeration to say that insurance for business interruptions is under-discussed. This is a shame as business interruption insurance can really help your business navigate tough financial situations. Considering how important it is, we thought it would be useful to put together a brief article on this subject. If this is something that you want to learn more about, read on as we discuss everything you need to know about business interruption insurance.
What Is Business Interruption Insurance?
Before anything else, we first have to talk about what business interruption insurance is. For those of you who don’t know, business interruption insurance, sometimes referred to as business income insurance is insurance that replaces income lost in a disaster. This disaster could be a fire or a natural disaster. Business interruption insurance can be included in a property/casualty policy or purchased as an add-on to one. Basically, as long as your business is halted due to direct physical loss or damage, the potential income lost will be covered by the insurance.
To add to this, business interruption insurance (whether bought as an additional rider or as a standalone policy) is tax-deductible as an ordinary business expense. With that being said, a business interruption policy will only pay if the cause of the business income loss is covered by the business owners’ property/casualty insurance. The amount payable is generally based on the past financial records of the business.
Business interruption insurance coverage lasts for 30 days maximum or until you are able to resume your day-to-day operations. However, an endorsement can extend the coverage to 360 days. The standard business interruption policy defines this period as the date that the covered peril began until the date that the damaged property is physically repaired and returned to the same condition it was in before the disaster.
What Does Business Interruption Insurance Cover?
Speaking of coverage, it’s important that we talk about what business interruption insurance covers. Here’s a quick run-through of the items covered by this type of insurance:
Profits
Fixed costs
Temporary location
Commission and training cos
Extra expenses
Civil authority ingress/egress
Employee wages
Taxes
Loan payments
While it’s important to know what your insurance covers, it’s also vital to know what it doesn’t cover. Here are items that won’t be covered by business interruption insurance:
Broken items resulting from a covered event or loss
Natural disasters
Undocumented income
Utilities
Pandemics and viruses
Conclusion
Hopefully, this article proves to be useful when it comes to helping you better understand business interruption insurance. While it may not be as utilized as other types of business insurance, business interruption insurance will help your business deal with unforeseen interruptions that can potentially hurt your business. If you have any more specific questions about insurance for business interruptions, we suggest that you speak with a professional.
Are you looking for insurance for business interruptions? We here at New Wave Insurance have got you covered. We are dedicated to helping you find the right insurance for your business. For more information on what we can do for you, visit our website today!