Business owners are well acquainted with the many ways in which the way they conduct
commerce can be interrupted. Natural disasters, damage to infrastructure, and supply chain
issues can place normal operations on hold for varying lengths of time. That’s when business
interruption insurance, also known as business income insurance, is essential.
Covered Expenses
The coverage can replace income and operating costs if a business owner is unable to open
their enterprise temporarily as a result of a covered loss. It can cover property loss, relocation,
taxes, and employee wages, along with rent, lease, loan and mortgage payments. The insurance
may also pay for training employees on using new equipment or government-mandated civil
actions such as road closures.
Waiting, Restoration Period
Most of the policies require a 48 to 72 hour wait before the policy begins to cover expenses.
The insurance will contain a restoration period. It’s the length of time that the insurance will
help pay for lost income and extra expenses. Depending on the terms of the policy, that could
last up to 12 months. Business owners are expected to board up the structure to prevent
further damage, looting, and injuries from entry by unauthorized individuals.
Know the Policy
Each policy is different and business owners need to read their policy carefully to understand
their exact coverage. Business owners can choose their own coverage limit. Choose that limit
carefully. Business owners will be responsible for any costs that exceed the policy limit.
The cost of business interruption insurance will depend on the industry, number of employees,
and the amount of coverage selected. Cost can also be dependent upon the business location
and exposure to potential risk. As with any insurance policy, there are exclusions. They include
floods, earthquakes, undocumented income, utilities, broken items, and communicable
diseases – as in a pandemic.
Business interruption insurance is an essential part of operating a business. It protects the
owner’s interests and income from catastrophic events and losses.