Many businesses fail in their first five years due to unforeseen halts in operations. You don’t want this to happen to you. The good news is that your business insurance can often offer help in case of business stoppage. Ask your agent to help you get business interruption insurance, and you’ll be in luck.
Understanding Business Interruption Insurance
An unforeseen accident or hazard in your business might happen at any time. A severe storm might cause structural damage, or a fire might reduce the property to ashes. Even internal issues, like burst pipes, could force a temporary closure as you work to recover.
In the meantime, you won’t have the income normally provided by the business. This could inhibit your ability to pay employees or meet ongoing overhead expenses. As a result, the business’s long-term solvency might become uncertain. You might even face the prospect of being unable to recover at all.
In these cases, you might be able to get help through business interruption insurance. Most commercial policy packages (CPPs) and business owners policies (BOPs) offer this coverage. It will help you cover essential business expenses that remain even after a halt in operations.
What Can This Policy Cover?
By buying business interruption coverage, you won’t suffer significant financial hardships because you had to stop operations unexpectedly. It will help you meet ongoing costs such as:
· Employee salaries
· Tax obligations
· Loss of net sales income
· Loan, rent or mortgage costs
· Relocation costs (if you have to temporarily move to a new location)
By having this resource available while your property undergoes repairs, you’ll be able to better weather the storm. That will keep your bottom line on an even keel.
When Business Interruption Coverage Will Not Apply
Even with comprehensive business interruption coverage, there will be times when your coverage won't apply:
· The policy might institute waiting periods before you can qualify for coverage. For example, you might have to wait 72 hours after a closure to start a claim.
· Most policies limit benefits to a certain time frame, usually 30 – 90 days depending on the policy.
· You might not be able to cover 100% of all lost costs.
· Interruptions from certain incidents like floods and earthquakes will not have coverage. However, if you have separate policies, then they might also offer interruption coverage.
The policy won’t apply to the actual property damage itself. You will need to have structure insurance and possessions coverage to pay for repairs to your building or replacement possessions.