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  • Writer's pictureAmanda Bird

What You Need to Know About Business Interruption Insurance

Updated: Nov 24, 2021

Do you know how much it would cost if your business closed for a week? What about a whole month? The truth is, the financial toll can be devastating especially if the reason why you’re temporarily closing your business is due to disasters such as fire, flood, and even theft or burglary. With this in mind, the next question that you should be thinking about is business interruption insurance.

Do you need business interruption insurance? What exactly does this type of insurance accomplish? This article will provide you with what you need to know about business interruption insurance and how it can benefit your company should something happen.

What Is Business Interruption Insurance?

Business interruption insurance provides coverage that can help protect your business from the physical and financial damage that could be caused by an unexpected event such as a fire, flood, or other natural disasters. It can also cover injury to employees and damages to your equipment.

It is important to know what you are covered for so that you will be able to get back on track without any further complications if an unfortunate event does occur.

Who Needs Business Interruption Insurance?

If you don’t think that you won’t be needing this insurance, think again. Remember that if you close down your business for a week, a month or even a few months, you still incur ongoing costs, without the revenue to offset them. You are responsible for these expenses even if you can longer trade as of the moment:

Paying Your Employee’s Wages

Even without a significant cash flow in your business, you still need to pay your employee wages for the months or weeks until your business can operate normally again. As an employer, it is your responsibility to do so as employees cannot manage without their wages, especially on short notice. So without business interruption insurance, you will have difficulty in drawing salaries for your employees.

Paying Your Rent

If you are leasing your commercial space, you still have to pay rent even if you’re not open. The same goes for your loans. Do you have an existing loan to fund your business so you can buy equipment or assets? Then you’ll definitely need money for monthly payments.

Paying Your Suppliers

Even if you experienced a disaster, you are still required to pay some of your suppliers. With your current situation, how will you be able to do this if you are no longer open and don't have significant cash flow? Business interruption insurance would benefit you and help prevent issues with your suppliers.

Paying Your Utility Bills

Council rates (rates when you own the building), electricity, water, and gas bills are things you cannot ignore and still pay regardless of your business closure. Since you usually pay bills quarterly, then these can significantly affect your cash flow. And without your business operating, the primary question is how you will be able to pay for them. Utility bills should be the least of your worries if you have business interruption insurance.

Paying Your Premiums

Lastly, if you have insurance policies for your business, from product liability insurance to professional liability insurance, property insurance, vehicle insurance, employee fraud insurance, theft and burglary, and much more, then you still have to pay for all of these premiums even if you’re temporarily closed.

If you have all of these responsibilities and much more, you must take care of these costs to keep your business going.


You’ll never know when disaster will strike your business. That’s why you must be prepared so that you will not suffer the physical and financial damage without the right coverage for all the losses you’ll incur.

New Wave Insurance can give you the right coverage for your business, such as insurance for business interruption. If you're not sure if you have enough protection for your company in the event of a catastrophe, contact our team today to learn more about how we can help.

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