What Is Business Interruption Insurance?

4/8/2021 (Permalink)

Drying equipment in Wyncote, PA.

Running a business is tough when you don't have the right insurance. A coverage option that business owners must have is interruption insurance. This is designed to help cover income loss while you rebuild your livelihood.

What Does It Cover?

Unlike property insurance, this will not cover costs associated with your rebuild in Wyncote, PA. Instead, it will cover operating expenses, such as:

• Revenue
  
• Mortgage, rent, or lease payments
  
• Loan payments
  
• Taxes
  
• Payroll
  
• Relocation costs
  
• Extra expenses
  
• Training costs
  
  

What Is a Restoration Period?
Your restoration period is the time that you can receive benefits from your interruption policy. Generally, it takes two or three days for your period to start. Typically, it lasts long enough for you to rebuild your business.

How Much Coverage Do You Need?
Every policy has a specified coverage limit. The limit is the maximum amount of money you can receive from filing a claim. Unlike property insurance, which covers undetermined costs like hiring a storm remediation company, interruption coverage is easier to calculate. You can calculate appropriate coverage based on your regular gross earnings. Keep in mind that any costs going over your policy limit will need to be paid for by you, so it is better to estimate growth rather than be left without funds.

What Does It Cost?
Each policy has a unique cost. Typically, it depends on your industry, employee numbers, and the coverage you need.

What Are the Exclusions?
This type of insurance is designed to support the income of a closed business. It does not cover damaged items, flood damage, undocumented income, utilities, and communicable disease-related shutdowns.
If a disaster happens, business interruption insurance can protect you and your company. It is a good way for small businesses to protect themself financially. It does this by offering a source of income when a business is shut down. However, it does not cover any damage directly related to a disaster.