What is included in a Business Interruption Insurance Policy?
The following is covered under a Business Interruption policy:
- Compensation for lost income if has to vacate its premises due to disaster-related damage covered under a Property Insurance policy.
- Covers the profits that would have been earned based on previous financial records had the disaster not occurred.
- Covers operating expenses, such as utilities, must be paid even though business ceased temporarily.
- Covers operating expenses in a temporary location while repairs to the permanent location are completed.
Considerations for Business Interruption Insurance
Here are some things to think about if you’re considering Business Interruption Insurance:
- Business Interruption Insurance cannot be purchased on its own; it must be added to a Property Insurance policy or included in a Business Owner’s Insurance policy.
- Policy limits should be sufficient to cover a significant amount of time to rebuild the permanent business space. Generally, the business must be closed for several days before coverage begins, and it does not pay for those days retroactively.
- Price of coverage depends on the risk of disaster to the premises. This may depend on the business location, nature, and how easily the business could temporarily function at an alternate location.
What is Extra Expense Insurance?
Extra Expense Insurance is also a possible inclusion to cover the amount needed to avoid shutting down a business while the permanent location is being repaired. This coverage reimburses for expenses that arise on top of normal business expenses but are not covered by Business Interruption Insurance. Depending on the disaster, Extra Expense Insurance may be sufficient to provide financial relief without utilizing Business Interruption Insurance.
What is included in a Business Interruption Insurance Policy?
The following is covered under a Business Interruption policy:
- Compensation for lost income if has to vacate its premises due to disaster-related damage covered under a Property Insurance policy.
- Covers the profits that would have been earned based on previous financial records had the disaster not occurred.
- Covers operating expenses, such as utilities, must be paid even though business ceased temporarily.
- Covers operating expenses in a temporary location while repairs to the permanent location are completed.
Considerations for Business Interruption Insurance
Here are some things to think about if you’re considering Business Interruption Insurance:
- Business Interruption Insurance cannot be purchased on its own; it must be added to a Property Insurance policy or included in a Business Owner’s Insurance policy.
- Policy limits should be sufficient to cover a significant amount of time to rebuild the permanent business space. Generally, the business must be closed for several days before coverage begins, and it does not pay for those days retroactively.
- Price of coverage depends on the risk of disaster to the premises. This may depend on the business location, nature, and how easily the business could temporarily function at an alternate location.
What is Extra Expense Insurance?
Extra Expense Insurance is also a possible inclusion to cover the amount needed to avoid shutting down a business while the permanent location is being repaired. This coverage reimburses for expenses that arise on top of normal business expenses but are not covered by Business Interruption Insurance. Depending on the disaster, Extra Expense Insurance may be sufficient to provide financial relief without utilizing Business Interruption Insurance.
The Last Word
Insurance experts estimate that Business Interruption Insurance is one of the most, if not the most, valuable coverage available, yet business owners often overlook it. Since Property Insurance only covers the cost of physical loss or damage and contents of a business in the event of a disaster, Business Interruption coverage is invaluable in covering the loss of income while the permanent business location is being repaired. Consult InsureGood today to learn about all of our business continuity resources.
