BUSINESS INSURANCE
Business Interruption Insurance
Manage Unexpected Business Closures with Business Interruption Insurance
Business Interruption insurance can help cover costs in case of an unexpected closure. The recent COVID-19 pandemic forced a vast majority of business owners to take a hard look at their business insurance policies and what they will/will not cover. For many business owners, the mandated closures severely impacted their bottom line.
While this specific scenario wouldn’t be something business interruption policies would typically cover, it did leave many questions regarding what is needed to protect your business from loss of business income. Keep reading for a breakdown on business interruption insurance.
What is Business Interruption Insurance?
Business expenses do not stop when a business is closed. Rent or mortgage payments are still due, and employees still need to be paid. Business interruption insurance covers operating expenses for businesses forced to close due to a covered event. Expenses covered may include the following:
- Mortgage, rent, or lease payments
- Employee payroll
- Lost income
- Taxes
There is a waiting period of about 48-72 hours after a covered event for the coverage to go into effect. After the waiting period comes what is known as the “restoration period.” The restoration period is when the insurance company is covering a business’ expenses for a max of about 30 days. Often, this can be extended by an endorsement to cover up to a full year.
Types of Business Interruption Insurance
You can purchase business interruption insurance as part of a business owner’s policy (BOP) or commercial property insurance. In either scenario, you generally have three types of business interruption that you may want to consider.
Business Interruption
This standard business interruption is found on most BOP or commercial property policies. The business interruption offers a 30-360 day restoration period for when a business has to shut down temporarily for a covered event. An example of this would be if a retail store had a fire. The business interruption portion of their business owner’s or commercial property policy would pay for any business expenses while the store is closed for repairs.
Extra Expenses Coverage
On occasion, extra expenses coverage can be added onto business interruption. Extra expenses coverage pays for expenses above what a business would normally incur due to the covered loss. For example, consider the above scenario with a retail store fire. If that store needed to relocate to another space while repairs are being completed or pay overtime to employees, this coverage would cover those additional expenses.
Contingent Insurance
Contingenet insurance is a type of business interruption insurance that provides coverage when a supplier, manufuacturer or client on which the business relies heavily suffers a loss that affects the business. For example, let’s say the retail store mentioned above isn’t involved in a fire but a major supplier of their stock has a fire at their facility. If that supplier is unable to provide the stock needed to sustain the retail store, there can be potential financial consequence to that business. Contingent insurance seeks to help in these scenarios.
How do I Know What I Need?
The best way to be sure your business is covered for what it needs is to chat with the experts. Call or email the professionals at the Craven Agency for a quote. We are licensed and willing to help with any questions regarding all your business needs!
Contact The Craven Agency today! Serving Shreveport, Bossier City, Minden, Ruston, Monroe and the surrounding communities in Louisiana and the Ark-La-Tex regions.
- Business Interruption Insurance
- Business Interruption & Extra Expense Insurance
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