The What, When & How of Business Interruption Insurance
For homeowners, damages to property can result in months, or even years, of displacement and repairs. But what if your property is also your source of income?
What Is Business Interruption Insurance?
When your premises or facilities are severely damaged and undergoing extensive repairs, business can grind to a halt. Business interruption insurance is designed to cover the loss of income suffered by businesses in the wake of disaster.
Where property insurance would only cover the actual physical damage to your business premises, business interruption insurance takes into consideration the profits that would have been earned during the unexpected downtime. This will continue until the business returns to where it would have been absent the fire.flood etc.
When Is Business Interruption Insurance Necessary?
All companies, regardless of sector, should consider business interruption insurance. As a policy, it is designed to place you in exactly the same financial position you would have been in had no disaster occurred in the first place.
No business is immune to loss. Whilst it is obvious how a shop, a factory, or a warehouse might lose income after a disaster, you might assume that office based work can easily be performed remotely.
However, whilst it might be possible to continue operations in the wake of unforeseen circumstances, can you be sure that you will be able to operate at the same level whilst still covering all of your overheads? What about all of the extra costs – such as alternative temporary premises?
How Does Business Interruption Insurance Work?
Business interruption insurance is rarely sold as a standalone policy. Instead, it is usually sold as an addition to a property insurance policy, or as part of a more comprehensive package.
A typical business interruption insurance policy will cover many things, including the gross profit that would have been earned; fixed costs, including the various operating expenses still being incurred by a company; the costs associated with moving to and operating from a temporary location; and any other extra expenses that allow a business to continue operating whilst repairs are taking place and then assist the business to return to normal trading levels.
Business interruption insurance coverage will cease the moment business is back to where it would otherwise have been but the policy will have a maximum period of cover. It is important that this period is long enough to allow a business to recover from any eventuality. 12 months is almost always not long enough.
To discuss business interruption insurance with one of our professional loss assessors, call our 24/7 national helpline on 0844 544 1699.
Call our 24/7 helpline on 0330 022 9179 for a free no obligations assessment