Is your business adequately protected if there was a devastating occurrence such as a fire or other natural disaster on your property that would force you to put a pause on operations? Business interruption insurance covers incidences that are normally insured through a Business Owner’s policy (BOP). If you do become obligated to shut down for restoration reasons, this policy is needed to recover your lost income until you reopen. Keep in mind that this coverage is for financial (not material) costs of a temporary shutdown and typically does not cover short or partial interruptions. Just about all business owners should consider having Business interruption insurance as part of their BOP.

What Does a Business Interruption Policy Cover?

  • Lost revenue you would have otherwise made if your business was not shut down.
  • Rent or lease payment for property or equipment that you don’t own while your business isn’t making money.
  • Relocation costs if the physical damages force you to move to a new location either temporarily or permanently.
  • Employee wages, as continuing payroll, may be needed to retain employees while your business is closed.
  • Taxes, regardless if they are quarterly or annual, while the business is no longer bringing in revenue.
  • Loan payments your business is still obligated to make while it is not making revenue.

How Much Coverage is Needed?

It can be difficult to determine exactly how much business interruption insurance you will need without a professional’s help to analyze your unique set of risks. To come up with an estimate, you can use your gross earnings and projections to guess your future profits. Make sure your business interruption costs do not exceed the coverage limit you choose as you don’t want to end up paying out of pocket for extra expenses.

What is the Cost?

The cost of business interruption coverage can depend upon a variety of factors, such as the industry you are in, the number of employees you have, the amount of coverage that is needed, your business’s location, and your risk of a covered peril or loss. For instance, if your business is located where there is a higher risk of wildfires (or any natural disaster), the cost to cover you could increase.

The Exclusions

It’s just as important to understand what business interruption insurance doesn’t cover so you are not hit with any surprises. For example, this policy doesn’t cover broken items that resulted from a covered event or loss, earthquake damage (covered by a separate policy), undocumented income that is not listed on business’ financial records, or utilities.

About Thayer Innes and Freeman Bunting Insurance Agencies

At Thayer-Innes Insurance Agency and Freeman Bunting Insurance Agency, we strive to provide comprehensive insurance solutions to support Ann Arbor homeowners. Our homeowners’ policies can be tailored to meet your specific risk exposures and provides much more coverage than a traditional policy, giving you the peace of mind you deserve. For more information about our products, contact us today at (855) 395-6316.