Business Interruption Insurance: Beat the Odds Before It Gets Gross
Picture this: the area right next to your commercial building catches fire, which slowly starts spreading to your business premises. And while the firefighters try to extinguish the fire before it reaches and destroys your building, it’s evident that you won’t be able to continue working there for some time, which could easily be weeks and even months. To make matters worse, the fire has damaged a good portion of your ready-to-ship merchandise. How do you compensate for your lost earnings while you wait for new stock products and relocate your business (even if it’s only temporarily) to your home?
Sounds scary, right? So, whether it’s fire, a tornado, or whatever else that may come in the way of your business properly operating, it’s always a good idea to take some steps to protect it. Statistically speaking, about 25% of all businesses that are closed due to disasters don’t open again – but yours doesn’t have to be one of them. You can assure your business is safe and your cash-flow is still flowing by purchasing business interruption insurance. This type of coverage can help you replace lost or reduced profits or income after a covered loss, so you can get your company back on it’s feet again.
Different businesses need different business interruption insurance policies when it comes to coverage choices. A small manufacturer, for example, might require different coverage than a retail or logistics operation. Here are a few things to think about when planning your interruption insurance.
- If you’re paying rent, how well is your building protected?
- How long will it take you to get your business back on its feet?
- What are the odds of a covered loss occurring? Hurricane, tornado, earthquake frequencies are all to be taken into consideration.
The key thing is knowing approximately how long it will take you to restore your business after it has experienced some kind of loss. It determines how much profit you might lose and can greatly vary depending on the seriousness of the loss of your business. A small fire, for example, might require only a 20-day restoration period, while something like a tornado may require several months.
In order to tailor a good business insurance plan, I advise you to speak to a broker or an agent that deals with these types of insurance. This will help you ensure that you and your business will be safe even in a worst case scenario.