Disaster can strike anytime, anywhere, and often with little or no advance warning. Here in Colorado, we’ve seen disasters of all types in recent years, from natural disasters like floods, fires and tornadoes, to human-caused disasters like accidents and oil spills According to FEMA and the Insurance Information Institute, as many as 40 percent of businesses forced to suspend operations due to a natural or human-caused disaster never reopen their doors.
Have you thought about the challenges and struggles your business would face in the wake of one of these disasters? It’s scary to even consider. Here’s something even scarier: A relatively minor fire, flood or accident that forces you to shut down operations carries many of the same challenges as a huge disaster such as a hurricane or earthquake.
Your commercial property insurance policy would help you rebuild your physical infrastructure, but are you equipped to deal with lost revenue and mounting expenses while you work to restore operations? There is an insurance coverage available to help your company meet its obligations while you recover and rebuild. It’s called Business Interruption Insurance.
How Does Business Interruption Insurance Help My Company?
Originally established for the manufacturing industry, Business Interruption Insurance has evolved into an essential risk transfer tool for all industries. This coverage provides resources that aid in recovery and can help get a company back on its feet quickly.
A small business owner‘s restaurant in Mississippi was devastated by Hurricane Katrina, leaving her with a blown-out ceiling, massive equipment damage and an unsalvageable building security system.
“The Business Interruption Insurance paid for the 23 days we were down,” Joy Hoda told the Insurance Information Institute. “Just by getting that money, it wasn’t so hard for us to make our payroll.”
This doesn’t mean Joy didn’t sustain any loss but her Business Interruption Insurance reimbursed her for everything she would have made, less any expenses the firm would have incurred. What her Business Interruption insurance policy did was allow her to continue to pay her staff, meet her credit obligations and quickly reopen her business to help serve the people of her neighborhood.
Business Interruption Insurance doesn’t just assist small businesses in meeting payroll and bills during a crisis. Larger businesses can also benefit from this essential coverage.
For larger businesses, Business Interruption Insurance can provide employees and shareholders peace of mind. Shareholders especially like to know a business’ profits are protected in case of fire, tornado, hurricane or other disaster.
How Does Business Interruption Insurance Work?
Business Interruption Insurance is sometimes known as business income insurance. It can compensate a business for lost income if the company must vacate their premises due to disaster-related damage that is covered under your property insurance policy. This may include such disasters as fire, flood, tornado, accidents or chemical spills.
This coverage is not normally a part of the “Business Owners Policy (BOP)” and must be purchased separately. It may also include coverage for expenses incurred to try and keep the business running in the face of such a disaster, such as temporary office space and equipment, overtime wages and the cost of expediting replacement equipment.
Business Interruption Insurance is triggered most often when there is physical damage to the business premises that makes them unusable or physical damage to nearby property that prevents customers or employees from accessing your business.
There may be a waiting period before the policy begins to pay out, and coverage continues as long as necessary to get the business up and running, though it rarely exceeds 12 months. Some policies may include coverage for such risks as civil unrest or utility problems such as power outages or water main breaks.
How Can I Learn More?
No business owner wants to think about what would happen to the business if disaster strikes, but it’s a reality that all business owners must face. Roper Insurance & Financial Services realizes it can be a daunting task to plan for a major business interruption—but it doesn’t have to be.
Don’t wait until your business experiences a significant loss to consider this vital business insurance protection. Contact Roper Insurance & Financial Services at [email protected] or (303) 721-1145 to learn more about how this type of coverage can fit into your overall business insurance portfolio.