How Do You Get Business Interruption Insurance?

Written By: Tom Martens on June 28, 2010 No Comment

Business interruption insurance policies can give peace of mind to all business owners. The policy will protect against lost profits and earnings as well as business expenses in the event of any disaster that leads to the closing of the business. Without sufficient protection a business is at risk of not being able to ever reopen.

Property insurance takes care of repairs needed to the building and the replacement of damaged equipment but lost income or profits and any expenses will be left to the business owner to handle. The responsibility of having to maintain the business financial requirements with no profit from the business can weigh heavy on most business owners. The majority of business owners will fold and the business will fail.

Business interruption insurance is an extension of another policy such as a business owners package or property insurance plan. Your agent will be able to explain the different policies that are available to you and help you in deciding which one is the most effective for your current needs.

There are several options that can be included in the policy, such as an extension on time that was originally planned for repairs to your building. You can protect yourself against delays in production with certain polices that will offer extra time or longer coverage. You should consider that it is normal for 48 hours to evolve before you have the policy become effective.

As with any insurance policy the business interruption insurance will be priced according to risk factor as well as options you choose. The location of your business as well as what type of business it is and the ease of being able to be relocated during a forced closing is considered in the total overall cost of the policy.

You can expect a reduced cost in the policy if your business is easy to relocate and production can be continued if the building is closed. The insurance covers the expense of relocation for your business so they will not have to pay for lost profits and earnings.

During the time a business is not able to be in production due to a covered disaster the business interruption insurance will cover any lost profits or earnings as well as many business expenses. The financial books will give the insurance company the information needed to determine what those losses would be. You must be certain to have all your business records in order, not only for the sake of a disaster.

Continuing expenses are often covered by the business interruption insurance policy such as electricity and water if they are needed to maintain the business while the building is being repaired. You will not have the lease payments paid since the profits and earnings that would have been lost are covered through the policy. The insurance policy will cover the cost to relocate the business to a temporary location for production to restart.

Check out many different insurance policies for the best coverage and the best price on premiums. Your current agent may not have the best overall package so it is best to shop around before committing to a policy.

Susan Reynolds is the content coordinator for a leading South African Insurance Provider who specialises in Commercial Insurance Policies.