Business owners accept economic ups and downs as a fact of life. But what happens when physical damage to a property brings an enterprise to a complete halt? Dealing with that unhappy prospect is the mission of business interruption insurance. This coverage, usually included in a business property policy or business operations bundle, enables a company to remain viable while it recovers. Structuring this coverage with care can shorten your business’s recovery time, and that fact alone builds a strong case for understanding this resilience-enhancing insurance.
What Business Interruption Insurance Covers
A business interruption policy pays if a covered physical damage event prevents your business from operating. Typical policies have waiting periods of 48 or 72 hours before the payments can begin. Once this period passes, your policy will pay up to your coverage limit for the length of the insured restoration period. Damage does not necessarily have to occur on your property. If civil authorities block access to your business for a lengthy road repair, a business interruption policy will cover this loss.
In 2020, numerous state and local governments imposed business shutdowns in response to the spread of the COVID-19 virus. Understandably, affected business owners wanted to know if their business interruption coverage would pay in this unusual situation. The answer in nearly every case was no. The reason is that business interruption policies specify physical harm such as fire, vandalism, or storm damage as a triggering event. With this concept in mind, you’re well-positioned to understand some of the finer points of this coverage.
How Business Interruption Insurance Works
If your business interruption policy is triggered, payments can cover:
- Reduction in net income
- Taxes
- Debt and dividend obligations
- Payroll
A business interruption policy can also cover relocation expenses for a temporary workplace. Payments in this situation enable you to keep your team together and prevent longtime customers from drifting over to your competition.
How Policy Extensions Meet Special Needs
What if your essential supplier halts its operations due to physical damage, but your business remains unharmed? If you have a contingent interruption extension in your policy, your insurance can pay while your supplier recovers. In this case, note that the damage to your supplier must match the covered events in your business’s policy. For companies that anticipate a high risk of customer defection, an extra expense extension is appropriate. This additional coverage can provide marketing funds to win back customers lost during the recovery period.
Properly implemented, business interruption insurance can enable your business to move beyond mere survival and return as a competitive force. An insurance agency with experience and in-depth business knowledge can help you shape interruption coverage that will protect the organization you and your team have built.
About Haughn & Associates
Founded by Michael Haughn in 1986, Haughn & Associates is a full-service, family-owned, independent insurance agency based out of Dublin, Ohio. H&A strives to provide the best possible price and unique insurance solutions across a myriad of industries, including construction, IT, Habitation & Commercial Property, Agriculture, and Engineering. Devoted to providing the best of business insurance, life and disability insurance, personal insurance, employee benefits, and bonds, H&A is proof that success lies in long-standing client relations and satisfaction. To learn more about how H&A can be of service to you, contact us at (877) 802-2278.
Social Title: Learn How Business Interruption Insurance Helps Your Company Survive Shutdowns
Social Description: How will your business survive if physical damage halts operations? Learn how business interruption insurance can get your company back in the game.
