Should Your Company Carry Business Interruption Coverage?

June 08, 2020

When your business suffers some kind of loss to property or equipment that renders it unable to function for a while, it’s your business owners insurance policy that comes to the rescue.

Covering things like repairs to your damaged building or replacing essential business equipment, your policy will put you back on your feet so you can have a fresh start and keep going.

Yet the critical question that needs answering for these times may be less obvious; what about your outstanding financial obligations and other costs you may incur while trying to get your business income-generating again?

This is where business interruption coverage comes in.

Should your company carry it?

If your business has bills that need to be paid or could be affected by other companies, the answer is likely a yes.

What Is Business Interruption Coverage?

Business interruption coverage is basically a type of insurance sold by your business insurance agency that pays the bills when your company cannot generate income due to a covered loss like a fire, flood, or something else that forces you out of your building or the company somehow unable to function.

It is a type of coverage that many company owners skip over to keep their insurance costs lower, sadly without really taking into consideration what could happen and how far the effects of a loss impact a company’s profitability and ability to survive after a significant loss.

What Does Business Interruption Insurance Cover?

There are four critical benefits that interruption coverage added to your general business property insurance policy can provide your company if it becomes unable to generate income due to a covered loss:

  • Business Income - An income benefit paid based on your company’s average income prior to the loss, enabling you to continue paying your company debts, payroll, and other expenses until the business is operational again. This coverage can be a crucial benefit that saves your company when you can’t generate income anymore until repairs are made.
  • Contingent Business Interruption - Pays your company a benefit if a supplier or other company that your business relies on to generate income suffers a loss that prevents yours from being productive. An example is a supplier of a critical part or ingredient needed to create your own products suffering a loss that stops your production as well.
  • Extra Expenses - A financial benefit that covers expenses beyond the normal business expenses that might be incurred after a loss, such as starting up work at a temporary location to become productive sooner, renting replacement equipment, and more.
  • Civil Authority - Coverage that pays expenses and lost income should your business be affected by a government order preventing access to your building, whether due to a need to update your building to current civil code requirements while it’s being repaired& or even if the restriction is due to problems at another location owned by another party.

Business Interruption Coverage -Rebound Faster

Although business interruption coverage is a type of insurance you may not think is needed, your business insurance agency recommends that you think again.

Even if a loss suffered at your location is covered, what about your existing financial obligations like equipment leases, loans, and credit lines with your suppliers?

How will you retain your talented, trained employees if you can’t pay them because the business is not generating income?

What if one of your suppliers suffers a loss that brings your production to a screeching halt?

In these and other similar circumstances, business interruption coverage added to your business property insurance policy could be the critical factor that gets you through until your company can become income-producing again!

Need Business Owners Insurance in College Station TX?

Talk to Jones & Associates About Business Interruption Coverage!

Call (979) 599-7532 to Learn More!