Running a business has its benefits as well as a fair share
of risks. When there is natural disasters or accidents, it can bring any
business operation to a sudden stop. This is where Business Interruption
Insurance can help a business.
This coverage is essential to businesses and can make the
difference between the business running its operation back or shutting down.
Here is how Business Interruption Insurance works and why it is vital for any
business.
Business Interruption Insurance is also known as or named
with some insurance as Business Income insurance. This insurance compensates
your business for the lost revenue when there is a disaster and while the
business cannot operate due to a covered event. While property insurance covers
physical damage to your business, Business Interruption Insurance focuses on
lost revenue if the business was operations.
For Business Interruption Insurance to be activated, an
event that is covered by the insurance such as fire, theft, or natural disaster
that causes physical damage or loss to your business property. Each policy may
include which events are covered events for Business Interruption Insurance to
be activated.
Each policy is different and therefore, review your policy
to see what the waiting period time frame. The waiting period may be 48 to 72
hours before the coverage can usually kick in. During the waiting period the
business usually has to absorb the initial losses.
The insurance will compensate based on the income generated
if the business was operating. This includes any lost profits based on your
financial records.
Besides lost revenue, business Interruption Insurance also
covers operating expenses such as any ongoing expenses for your business, such
as rent, salaries, even when the business is temporarily closed due to the
disaster.
The duration of
coverage is dependent on each policy; however, the maximum period of coverage
is often up to 12 months. During this timeframe, the business interruption
insurance will cover lost income and expenses. This timeframe is known as the
restoration period.
As with any circumstance, once your business is back on to
pre-disruption levels, the coverage terminates. However, Business Interruption
Insurance ensures that your business can survive through this difficult
disaster financially, while protecting you from significant income loss.
You are able to maintain and retain your employees as
Business Interruption Insurance can cover payroll expenses when the business
was not operational.
By having financial stability, your business was able to
maintain your customers as with the insurance coverage you were able to
continue providing your services. Therefore, Business Interruption Insurance
was able to help you retain your customer base.
Understanding and knowing the financial safety the Business
Interruption Insurance provides can give you the piece of mind and help you to
focus on bringing the business back on track without adding the financial
stress or the stress of financial ruin.
The common disasters that are covered by Business
Interruption Insurance are earthquakes, hurricanes, and other natural events
that can cause physical damage to your property. Fire is another disaster that
can cause businesses to halt their operations and insurance covers the income
loss.
Learn more about Business Interruption Insurance by calling
Jake at Karstens Financial at 855-657-8400