Protecting Your Business with Business Interruption Insurance

11 September 2023
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Every day, your business faces risks. Many of those risks can keep you from doing business…and not all of them come from natural disasters.

88% of the time, the things that interrupt your business come from other sources. These sources include structural fires, water damage, electricity loss, equipment failure, supply chain disruptions, and crime.

There are certainly steps you can take to mitigate these risks. For example, you can install a generator to guard against business interruption due to power grid failures.

Yet sometimes even those measures fail.

Why You Need Business Interruption Insurance

Every day you can’t do business is a day of lost income, and that’s a threat to your company’s ability to survive. It could mean being unable to make payroll, being unable to invest in capital improvements, or even being unable to pay basic overhead.

Business interruption insurance replaces this lost income. It bridges the gap between the disaster that interrupted your company’s ability to keep selling its products and services and your date of recovery.

What Business Interruption Insurance Can Do For You

Business interruption insurance can:

  • Cover operating expenses, including business leases, utility bills, and inventory.
  • Help you meet payroll.
  • Help you cover loan and tax payments.
  • Receive reimbursements for lost profits, based on the prior month’s performance.
  • Cover your ability to operate from a temporary location.
  • Cover training costs resulting from covered losses.
  • Cover extra expenses resulting from covered losses.

In short, business insurance keeps you in business until you can resume normal operations.

How Business Interruption Insurance Can Protect You

While business interruption insurance doesn’t cover everything (many policies specifically exclude interruption due to pandemics, for example), it can keep cash flowing from the start of the business interruption period to the end of the period, for 30 days, or for 360 days, depending on the specific policy you purchase. The amount of time that your policy covers is known as the maximum indemnity period.

It is important to work closely with your insurance agent to evaluate both your risks, and how long it will reasonably take for your business to return to normal operations after the crises you are most likely to face. This will allow you to purchase a policy that is both cost-effective and useful, when the time comes.

Your agent may take a few factors into account when making recommendations, including the size of your business, the deductible you think you can absorb, the amount of coverage you’re most comfortable with, and your likelihood of facing a business interruption event. Your agent may also be able to recommend specific risk mitigation strategies you can employ to earn a discount on your business interruption insurance.

Add Business Interruption to Your Total Policy Package

Business interruption insurance doesn’t cover every risk a company might face. You need a property and a liability policy as well, and may require other policies based on your industry or the specific way that you do business.

If you don’t have the insurance you need for your peace of mind then don’t wait another minute. Contact one of our agents to go over your policy options and to find the business interruption insurance policy that’s right for you.

Chris Tracy

VP – Northern California

Chris is a VP Northern California at Inszone Insurance Services. His interest in commercial insurance was piqued in the summer of 2010 during an internship with Zurich North America where he came to appreciate the reward of helping businesses understand and defend themselves from risk. Given his background handling claims for Commercial Middle-Market, Global Corporate, and Large Construction accounts, he is able to provide unique insight to clients. Prior to his time in the commercial insurance field, his interest in human behavior culminated in the attainment of a Master’s Degree.

When Chris is not working, he enjoys spending time with his family and friends, losing golf balls every way imaginable, trying new wines, and hiking.

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