3 Ways Business Interruption Insurance Protects Your Business

3/15/2021 (Permalink)

Protect your business with interruption insurance

Interruption insurance provides coverage for income lost due to damage to a business caused by a covered cause of loss. There are multiple ways that this coverage helps protect your business, including these three.

3 Ways That Business Interruption Insurance Protects Your Business

1. Replaces Lost Income

If a covered cause of loss causes damage to your property that results in lost income due to a business interruption, destruction of inventory or another issue, your insurance will compensate you up to the limits of the policy. The amount of reimbursement is based on your preloss earnings and is usually calculated as revenues less ongoing expenses. For example, if a severe storm damaged your roof, leading to water damage in your building that forced you to close while a restoration service in Salt Lake City, UT, worked to dry out your building, you may be compensated for the lost revenue that resulted from that closure.

2. Covers Extra Expenses

In addition to replacing lost income, interruption insurance provides reimbursement for extra expenses incurred due to damage from a covered cause of loss. For example, if your building was damaged in a fire and you had to temporarily move your business to a different location while fire restoration repairs were being made, the cost of moving to and renting that location would be covered as an extra expense.

3. Helps Businesses Re-Open Faster

Without coverage for lost income and extra expenses, many businesses struggle to make payroll and cover ongoing expenses after a loss. This can cause some businesses to close permanently. Business interruption coverage makes it easier for businesses to cover immediate expenses and return to operations as quickly as possible.

Interruption insurance protects businesses from the financial risks of not being able to operate during the period between when damage occurs and when the business can resume normal operations. An insurance professional in your area can help explain how this coverage can benefit your business.