Importance of Having Business Interruption Insurance for your Business. Above all else, one thing you should protect is the livelihood of your business. Many companies cannot afford the costs of downtime for too long. Should their standard business operations come to a halt, finding a way to get things up and running against will be the first objective. However, in the meantime, how do you protect yourself from the financial loss associated with that downtime? Business interruption insurance is the solution to that problem.
Business interruption insurance can be a vital safeguard to help you company get through a crisis. It’s an additional layer of protection that can turn a business’s life-threatening crisis into a much more manageable event. While there are businesses who may never have to make use of their interruption policy, it is still one of those types of coverage many consider vital. Just as you would not run a business that doesn’t have your property, possessions, vehicle, or professional liability insured, you would be wise not to operate for too long without business interruption insurance.
What is business interruption insurance?
As the name suggests, business interruption insurance is designed to cover your company for any income that is lost if you have to suspend normal business operations, such as if the building has to shut down. The amount you can claim for this period depends on the calculations that your insurance provider will use based on the financial records you provide for them. Not only will it cover the income your business might lose, but it can also cover the costs of operations that might still be ongoing, such as utilities being supplied to the premises.
In most cases, business interruption insurance is added on to an existing property insurance policy. There are all kinds of events that might cause the business to suspend normal operations for some time. There are natural disasters such as fires and floods. There are equipment problems like vital machinery malfunctions and IT interruptions. Business interruption insurance can even cover you in the result of an injury lawsuit. As such, the costs that you might incur by closing the business, such as by losing customers to your competitors or through generally lost income, can be recouped.
What to think about when selecting business interruption insurance
To ensure that your business interruption insurance offers the protection that it’s supposed to, there are some factors to think about when choosing a provider, policy, and level of coverage. For instance, you may want to think about how long you could be dealing with reduced business operations in the result of an interruption, known as your indemnity period. A full risk assessment and investigation of the timeframe in which you can get things back up and running can help.
You also want to be certain that the limits you choose for the amount of coverage provided are going to be suitable to cover the company’s expenses for that timeframe. A general suggestion might be to have enough to cover company expenses and income for a week but, again, an individual assessment of your risk can help you come to a more specific figure. For some businesses, it can take two or three weeks to get the business back to normal. As your business grows and changes, your needs are likely to change as well, so it’s important to adjust the policy when needed, too.
The costs of business interruption insurance
Of course, you will want to make sure you are getting the most cost-effective policy possible. There is a range of factors that will determine the cost of your coverage. For one, your chosen indemnity period and the amount of coverage you want, the location of your business and type of operations you are running, and the potential risks to your operations will all be considered. Anything that adds a degree of risk of interruption will increase the price of coverage. Your ability to run the business without access to the property may be considered, too.
You may be able to add additional coverage for certain expenses to your business interruption, too. For instance, some costs may exceed your normal operating costs during a business interruption. This is designed to help protect your businesses from the additional financial risk of having your property be out of access for a period of time. Extra expense policies tend to be different from business interruption insurance and may not be able to cover all of your costs. Business interruption insurance is designed to cover the full costs of having to shut down your business property for a length of time. As such, as Weir Insurance, is covers costs of over £5000.If you want to know more about business interruption insurance and how it could help protect your livelihood, get in touch with Weir Insurance today.