Preparing for the Unexpected: The Importance of Business Interruption Insurance

Written By Charlotte Insurance on April 19, 2023. It has 0 comments.

Preparing for the Unexpected The Importance of Business Interruption Insurance

Is your business prepared for every possible problem? You probably already have a standard business owner’s policy in place, but what happens when your business needs to shut down for some unforeseen reason? For example, a hurricane might take out your warehouse, or your office could be subjected to major flooding. Obviously, you won’t be able to operate until everything is repaired, so how can you handle the loss of business? Luckily, it’s fairly simple.

You turn to your business interruption insurance.

What Is Business Interruption Insurance?

While some business insurance policies will cover your building, your products, and even your company vehicles, business interruption insurance is designed to kick in when your company is forced to shut down for some time. It will replace the income that your company would make from selling those products, should your warehouse not have been damaged due to the weather or a fire.

Unlike the other business insurance options, this type of insurance is solely designed to provide your company with enough money to keep everything going as you rebuild. This way, you won’t have to overcome enormous financial losses.

What Does Business Interruption Insurance Cover?

Generally, business interruption insurance takes effect when the damage is initially done. From the point that your company can no longer operate until the time when everything is rebuilt and functioning again, it will provide your business with needed income. Keep in mind though, that standard policies cover a loss of income for up to 30 days, although in some cases, this can be extended.

The money that your business receives from its business interruption claim is allowed to be used for:

  • Temporarily Relocating – If your business needs to move to a different location while its original one is being repaired, your business interruption insurance will cover it. This includes the costs of moving equipment, furniture, and other things as needed.
  • Salaries – Your business interruption insurance will pay for your employees’ salaries, ensuring that their needs are met while the company is rebuilding and preparing to reopen.
  • Training – If you need to purchase new machinery and train employees on it so that you can start fulfilling customer orders, the insurance will cover it.
  • Operating Expenses – Standard operating expenses, such as paying for utilities and more, are also allowed when you have to call in a business interruption insurance claim.
  • Additional Expenses – In addition to the many expenses listed here, business interruption insurance will cover a number of others, depending on the policy and what your company needs.

What Doesn’t It Cover?

Although your business interruption insurance is designed to help keep your company’s doors open while it rebuilds, there are some things that it won’t cover. For example, your physical property that was damaged won’t be covered (that requires a different policy), as well as business shutdowns due to pandemics and similar issues. However, these types of policies are available. You just have to ask your insurance agent.

Have Questions? Contact Charlotte Insurance

Wondering if your company needs business interruption insurance? Contact Charlotte Insurance. Our agents can explore and explain all available options with you and put together the coverage plan that your business needs.

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