Business Interruption Insurance: How It Keeps You Running After a Loss
When your business has to partially or completely shut down because of an unforeseen event, the cost can be enormous. You could lose revenue while paying to address the issues that caused operations to stop, and you’ll still have to pay expenses and payroll. Lost trust is difficult to quantify and even tougher to recover.
Many small businesses can survive a short-term disruption or damage to a building. Not many can go weeks or months without income. Business interruption insurance can help you bridge the gap and rebound from an unexpected shutdown if certain criteria are met.
What Is Business Interruption Insurance?
Business interruption insurance, also called business income insurance, is a type of commercial insurance that replaces lost income and covers operating expenses when normal business operations are stopped or diminished due to a covered event.
Business interruption typically cannot be purchased as a standalone policy. It’s usually part of or added to a business owner’s policy or property insurance policy.
A business interruption policy typically kicks in after a waiting period of 24-72 hours from the time of the event or damage. The claim typically lasts until repairs are made or normal business operations are restored. However, there’s usually a monetary limit and a period of restoration with a maximum timeframe.
What’s Typically Covered by Business Interruption Insurance?
- Lost income based on financial records
- Mortgage/rent
- Utilities
- Employee payroll and benefits
- Taxes
- Loan payments
- Temporary relocation
Additional expenses incurred to minimize downtime, like expedited shipping for new equipment and supplies and staff training.
What Events Trigger Business Interruption Coverage?
Coverage is almost always triggered by physical loss or property damage that stops business operations. This includes:
- Fire and smoke damage
- Severe weather (wind, snow, ice, rain)
- Vandalism, riots, or civil unrest
- Theft or break-ins
- Explosion
- Impact from a vehicle or aircraft crash
- Lightning strikes
Damage from floods, earthquakes, pandemics, utility damage, and economic downturns are typically excluded from business interruption coverage.
Business interruption insurance can be a valuable safety net in case circumstances beyond your control force your business to fully or partially halt operations. At Stanton Insurance Group, we can explain your options based on your industry, location, supply chain, and other factors and find a policy that makes sense. Get a quote today!
