Posted on May 17, 2014

How Business Interruption Insurance Can Save Your Business

Business interruption insurance

Ever thought about what would happen if your business experienced property damage due to a flood, fire or other natural disaster? If the damage is extensive, the likelihood that your business would need to close for repairs is a definite possibility. That would mean either temporarily shutting down completely or relocating to another location until the repair is complete.

But the thing about closing your business even if only temporarily is that bills and expenses don't stop just because you do. Without an open business, there are no sales, and without sales, no income to pay bills. Commercial property insurance will pay for repairing or replacing the building or property that is damaged, but it will not cover lost income or expenses.

That is where business interruption insurance could potentially save your business. This vital coverage keeps businesses running strong by covering expenses and protecting profits when operations are disrupted for a covered event. Business interruption coverage is not offered as a separate, stand along policy. It can typically be added to commercial property insurance or as part of a business owner's policy (BOP).

Insurance companies determine payout based on the policy limits and past financial data. Examples of what these policies pay include rent, utilities and insurance. If a temporarily location must be rented, business interruption insurance will cover expenses related to the move as well.

Ultimately, business interruption coverage protects companies during times when they need it most. By having this insurance in force, companies will not have to face potential financial risks that could result in closing down the business forever. Instead, the company can continue to pay bills and operate until able to return to the business location. That's coverage that every business owner needs.

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