Should You Consider Business Interruption Insurance?

Business interruption insurance is an important type of policy to have in the event that your company cannot operate due to a covered incident. It may or may not be a part of your current business insurance plan, but it is nearly always beneficial when a significant event occurs leaving you unable to operate your company. If your business was unable to operate for some time as it recovered from a loss, who would pay your vendors and employees? Having a business interruption insurance policy could help.

You most likely would never think to operate your company without proper business insurance in place to protect the property itself. However, you may not think about what would happen to your business financially if a fire or significant windstorm left it unusable. While you cannot buy business interruption insurance outright on its own, it is often an add-on to property insurance.

Here are some things to think about when deciding if business interruption insurance is a good investment for your company.

• If you have to vacate the property due to a disaster-related incident covered under your business insurance plan, this insurance will compensate you for lost income. It provides an equal amount to the revenue you would have earned based on previous earnings.
  
  
• In most cases, you will need to customize this policy for the length of time you want it to be available to you. In some situations, you may have to wait 48 hours before the coverage kicks in. Determine if this is the case, how much you will be given, as well as how long the policy will pay for your lost income.
  
  
• In most cases, the availability and cost of this insurance are directly related to your risks. If you work in a business with a higher risk of fire, for example, you'll pay more for this policy.

In most situations, business insurance helps cover risks associated with operating a business so you don't have to dig into your savings to cover the losses. If your company could not operate for a few weeks, could you financially afford to cover the loss? Business interruption insurance can help give you some confidence in your ability to do this.