Understanding business interruption insurance
One of the most crucial types of insurance your company can have is business interruption insurance. It pays for certain business expenses (like continued normal operating expenses, including payroll) when a covered loss occurs.
For example, the business interruption insurance in a biBerk business owners policy (BOP) can help support your company temporarily if a severe storm damages your office and forces you to relocate while a construction company completes repairs.
This article provides details on business interruption insurance and why every company should consider carrying it.
Why business interruption insurance is essential
Business interruption insurance (also called business loss insurance, business income insurance, or business interruption coverage) provides companies with the funds they need to keep operations running following a covered incident. This type of insurance is typically triggered by events like fires, water damage, or hurricanes.
Any of those incidents can make it hard for a business to continue bringing in revenue at the typical pace. So, business income insurance helps bridge the gap until normal operations resume.
What does business interruption insurance cover? It provides payment for several types of expenses, including:
Lost income
This is one of the most important aspects of the coverage, compensating for income lost due to the business interruption.
Ongoing operating expenses
Costs like rent, mortgage payments, utilities, and loan payments that continue even when a business is closed fall into this category.
Expenses incurred to avoid or minimize downtime
If you need to temporarily relocate your operations or rent equipment, your business interruption insurance can cover related costs.
Employee wages
It’s critical to be able to cover employee wages during business interruptions. (Note: Officers, executives, department managers, and contract employees are excluded.)
What does business interruption coverage cost?
The good news for business owners is that business interruption insurance is included in a business owners policy (BOP). Your cost for a BOP depends on several factors, including your industry, company size, revenue and others.
You can determine what you’ll pay for a BOP by getting an instant quote on our website. You simply provide some information about your company and operations, and we generate a quote for your policy.
The liability portion of a BOP provides a wide range of protection, including coverage for:
The property insurance provisions apply to:
- Your building or leased space. This part of your BOP protects the building you own or leased space you operate from.
- The contents of your building. If tools, equipment, other business assets, or the property of others in your possession are damaged by an employee, natural disaster, or theft, your policy can cover the costs.
- Business interruption. As noted above, this coverage is for your business income and other expenses following an incident.
How to report a business interruption insurance claim
What should you do if your company’s operations are interrupted by a covered event? Here's a general overview of the steps involved to file a claim:
- Contact your insurance company. Get in touch with your insurance company as soon as possible to report the incident and initiate the claim process. Provide details about the event, including the date and time it occurred and the type of damage sustained. If you purchased your insurance from biBerk, you can report a claim conveniently online.
- Review your insurance policy. It’s helpful to familiarize yourself with the terms and conditions of your policy, including covered events, exclusions, and claim reporting procedures. For example, it’s a good idea to check if there are specific requirements for documenting the incident or a timeframe for reporting the claim.
- Thoroughly document the damage. Take photos or videos of the damage to your property. For example, if you own a store and a fire damages your building, capture images of the areas that burned including any damaged inventory. You should also collect any relevant documentation from police and other first responders.
- Gather financial records. You’ll need financial documents, such as income statements, tax returns, and expense reports, to support your claim for lost income and expenses. Your insurance provider will use these to assess and understand the financial impact of the interruption on your business.
- Estimate the property restoration period. Determine how long it will take to repair or replace the damaged property and for your business to resume normal business operations. That may require talking with contractors or other professionals to get estimates for the repair work.
- Respond promptly to the adjuster. It’s essential to work closely with the insurance adjuster assigned to your claim, providing any additional information or clarification they may need. Responding to their inquiries promptly and maintaining open communication throughout the process helps things go more smoothly.
Business interruption insurance keeps your company moving forward.
Business interruption insurance is a crucial component of a comprehensive risk management strategy for any business. It provides a financial safety net that can help you weather unexpected storms and ensure the continuity of your operations. By understanding the coverage, costs, and claims process, you can make informed decisions to protect your business from potential financial losses.
Contact us if you have questions about business interruption insurance.