What would happen to your business if it was unable to operate for an extended amount of time? Business interruption insurance covers you for loss of income should an unexpected event occur that stops your business from running as normal.
While buildings and contents insurance cover the physical aspects of your business, they don’t take into account the mounting costs of being unable to operate. Businesses that aren’t protected risk losing the business if it is unable to recover from a disruptive event.
What’s covered in business interruption insurance?
Business interruption insurance usually covers things like damage to a premises that stops the business from operating. This kind of damage is usually caused by events such as fire, storms, or flooding. It can be applied to any place of work including an office, a shop front, a market stall, or a home office.
The breakdown of essential equipment is also usually covered in business interruption policies.
Additional coverage
Depending on your level of cover, your policy may include times when people are unable to get into your business premises (for example if there is damage to a nearby property)or damage that has occurred at the premises of a supplier or customer.
BI insurance helps you get your business back up and running as quickly as possible. It does this by taking care of essential tasks like replacing damaged stock or paying wages while your employees cannot work, so you don’t lose them to competitors.
A policy like this can also cover you for payments on loans that were taken out before the period of inactivity.
How are payouts calculated?
Business interruption insurance is calculated using an estimate of how much income was lost during the time your business was unable to operate. The following factors are considered;
- How long the business was closed for
- Business revenue for that period (if you were able to trade)
- Any costs your business had to pay such as wages, fixed payments, or the cost of moving to another premises (whether temporary or permanent)
- What your projected income would have been looking at the health of the business, the industry, and anything else that would have affected your business such as seasonality
Should you get Business Interruption Cover?
The need for business interruption insurance varies from business to business. If you are a business that holds a lot of stock or you need large, and specific premises to operate out of, you would benefit from this type of insurance.
Business interruption cover is often sold as an add-on to business insurance, or it can be sold as a stand-alone policy too. However, you will need to have valid building and contents insurance in place should you need to make a claim.
Business Insurance from The Bateman Group
The Bateman Group provides a full range of insurance and risk management services for medium to large-size companies. With access to the entire market, we can help you find the right business interruption insurance to protect your business.
