What would you do?
Your commercial property insurance policy would pay to repair and replace everything. But how would you run your business in the days, weeks, or months until your office is good as new? Hopefully, you would have a business interruption policy in place to help you stay in business while you rebuild your location. That raises the question:
What exactly is business interruption insurance?
Business interruption insurance, or business income insurance, covers your loss of income when a disaster strikes. In the event of a fire like we mentioned above, your business income policy would help replace lost income and defray the costs of setting up a temporary location to run your business from.
What does business income insurance cover?
Here are some of the things typically covered under a business interruption insurance policy:
- Profits: Any profits that would have been earned if your business was running as usual. This amount is determined by your financial statements from the previous month.
- Fixed Costs: This covers any normal operating expenses like rent, electric bills, etc. that are still occurring at the property.
- Extra Expenses: Sometimes extra expenses (beyond your fixed costs) that no one planned for arise. If these costs are required to run your business and are considered reasonable by your insurance company, they will be paid.
- Temporary Location: Talk to your agent about the costs of setting up, moving to, and working from a temporary location.
- Commission & Training Cost: Here's one you might not immediately think of. What if your old machinery is replaced with machinery that your employees don't know how to operate? This section of business interruption insurance covers any training required to educate your workers to do their jobs.
- Civil Authority Ingress/Egress: Suppose the government closed down your street and you couldn't enter your office. Your business would be covered.
How much business income coverage do I need?
This depends on the kind of business you have and the size of your business. As you can imagine, a plumber that works out of a rented garage space will require very different coverage than a manufacturer that occupies 1,000,000 square feet of floor space.
Here are a few questions to discuss with your business insurance agent:
- What are your monthly overhead costs?
- How much would it cost to operate from a temporary location?
- Is your area prone to any specific natural disasters?
- In the event of a disaster, how long would it take you to get back to business as normal? It could take anywhere from 30 days to several months.
- Does your existing building have functional fire sprinklers?
Who needs business interruption coverage?
It comes down to this: if you run a business, then you need to protect your back. Accidents and disasters happen. Doesn't it make sense to ensure that money keeps rolling in even if your business's location is temporarily out of commission?
How to get a free business interruption insurance quote:
We offer a complimentary insurance consultation. We'll take the time to understand your business, clients, and specific industry-related liabilities and challenges. Contact us today at (877) 341-5728 to schedule your free, no strings attached business interruption insurance consultation today.