Business Interruption Policies

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There’s the cost of doing business, and then there’s the cost of not doing business. When something disrupts business as usual, such as theft, vandalism, a fire, or water damage, the role of business interruption insurance is stepping in to protect against income or profit loss until you can resume business.

Making it part of your business insurance plan

Generally, business interruption is included in some form in business insurance policies, but not always. Talk to your broker and ensure that you have it. Keep in mind that property insurance only covers loss or damage related to the physical structure and its contents. But business interruption insurance will cover any costs incurred as a result of any repairs required or continued fixed costs.

Picking the right terms

There are two ways you can go with interruption insurance – it can be based on lost earnings or profits. Basing it on profits has its advantages in that coverage continues until your business returns to a state of profitability; usually, it lasts a 12-month term but it can be extended. The earnings option means that coverage stops as soon as business activity resumes.

The cost of temporary relocation

The cost of doing business elsewhere if you have to operate from a temporary location. This would include the cost of moving to another location.

Extra expenses

An insurer may also cover additional expenditures that a business may choose to incur in order to keep the business running as opposed to closing it and losing income.

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