Are You Covered in Case of a Business Interruption?

If a fire causes the facility to be temporarily unusable, what would you do next? Ideally, you would move to a temporary location while your permanent place of business is being repaired. Yet, traditional commercial insurance doesn’t cover this move or a loss of income when a business must temporarily close.

With business interruption insurance, this setback can be minimized by simply adding this coverage to your commercial insurance policy.

What’s Covered in a Business Interruption Insurance Policy?

The following is covered under a typical policy:

  • Compensation for lost income if has to vacate its premises as a result of disaster-related damage covered under a commercial insurance policy.
  • Covers the profits that would have been earned based on previous financial records, had the disaster not occurred.
  • Covers operating expenses, such as utilities, that must be paid even though business temporarily ceased.
  • Covers expenses of operating in a temporary location while repairs to the permanent location are completed.

Some Things to Consider

Here are some things to think about if you’re considering business interruption insurance:

  • This policy cannot be purchased on its own; it must be added to a commercial insurance policy or included in a business owner’s insurance policy.
  • Policy limits should be sufficient enough to cover a large amount of time to rebuild the permanent business space. Generally, the business must be closed for several days before coverage begins, and it does not pay for those days retroactively.
  • Price of coverage depends on the risk of disaster to the premises. This may depend on the business location, nature of the business, and how easily the business could function at an alternate location temporarily.

Extra Expense Insurance

Extra expense insurance is also a viable inclusion to cover the amount needed to avoid having to shut down a business while the permanent location is being repaired. This coverage reimburses for expenses that arise on top of normal business expenses but are not covered by business interruption insurance.

Depending on the disaster, extra expense insurance may be sufficient enough to provide financial relief without having to utilize business interruption insurance.

Bottom Line

Insurance professionals estimate that business interruption insurance is one of the most, if not the most, valuable coverage available, yet business owners often overlook it. Since commercial insurance only covers the cost of physical loss or damage and contents of a business in the event of a disaster.

Business interruption coverage is invaluable in covering the loss of income while the permanent business location is being repaired. Consult Atlanta Insurance today to learn about all of our business continuity resources.




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