Business owners are diligent about purchasing insurance to cover fire, theft, or injury to an employee but many never think of business interruption insurance. While not a part of traditional business insurance policies protecting your company from lost profits is an important consideration. Lost profits due to an accident or temporary closure of a business are often overlooked until something happens.
In the event of a problem business interruption coverage takes two to four days before it starts to kick into gear. While this may seem like allot of time if you have had a fire, flood, or other damaging industrial accident losing a few days profit is much better than loosing several weeks or months while the business is put back together. Most policies will also cover the costs of the operating expenses of the business. Electricity, water, and gas are all continuing expenses that build up even if your business is not running at all never mind the cost of your lease from month to month.
There are several things to keep in mind about a business interruption insurance policy before you do your shopping. An important thing to be sure of is make sure your policy allows for ample time for the worst disaster that may happen. One of the last things you want to happen in the wake of a stoppage of business is to have your interruption insurance coverage to run out because repairs or relocation is taking too long.
When it comes to obtaining quotes for your policy premiums they are affected in a few ways. First is the type of business you own. A small retail or office type business that does little in the way of physical work will have relatively small premiums. If your business is a bit more dangerous such as an auto repair shop or a machine shop where there is allot of machinery and flammable materials your premiums will be higher. This is not the only thing that will drive up premiums. If you have a niche business like automotive transmission repair it will be much harder to open a temporary place to continue business than if you ran a small accounting and bookkeeping business.
It needs to be said that the only drawback is that interruption insurance only covers net income losses. This is to be expected though and gross income in the case of a retail or manufacturing business includes the cost of goods and materials covered by other insurance policies. For service related businesses the coverage for things like rent and power are covered anyway so the loss is minimal.
While business interruption insurance many not initially be on an old or new business owner’s radar it is something to think about now. Like any other insurance policy there are some hoops to jump through to get what you need. Quotes need to be found and coverage’s need to be determined. But in the end no matter the amount of papers work and red tape to go through recovering any lost income and expenses while rebuilding a business after a disaster is worth the little time it takes to get the policy and get it to kick in.
In the event of a problem business interruption coverage takes two to four days before it starts to kick into gear. While this may seem like allot of time if you have had a fire, flood, or other damaging industrial accident losing a few days profit is much better than loosing several weeks or months while the business is put back together. Most policies will also cover the costs of the operating expenses of the business. Electricity, water, and gas are all continuing expenses that build up even if your business is not running at all never mind the cost of your lease from month to month.
There are several things to keep in mind about a business interruption insurance policy before you do your shopping. An important thing to be sure of is make sure your policy allows for ample time for the worst disaster that may happen. One of the last things you want to happen in the wake of a stoppage of business is to have your interruption insurance coverage to run out because repairs or relocation is taking too long.
When it comes to obtaining quotes for your policy premiums they are affected in a few ways. First is the type of business you own. A small retail or office type business that does little in the way of physical work will have relatively small premiums. If your business is a bit more dangerous such as an auto repair shop or a machine shop where there is allot of machinery and flammable materials your premiums will be higher. This is not the only thing that will drive up premiums. If you have a niche business like automotive transmission repair it will be much harder to open a temporary place to continue business than if you ran a small accounting and bookkeeping business.
It needs to be said that the only drawback is that interruption insurance only covers net income losses. This is to be expected though and gross income in the case of a retail or manufacturing business includes the cost of goods and materials covered by other insurance policies. For service related businesses the coverage for things like rent and power are covered anyway so the loss is minimal.
While business interruption insurance many not initially be on an old or new business owner’s radar it is something to think about now. Like any other insurance policy there are some hoops to jump through to get what you need. Quotes need to be found and coverage’s need to be determined. But in the end no matter the amount of papers work and red tape to go through recovering any lost income and expenses while rebuilding a business after a disaster is worth the little time it takes to get the policy and get it to kick in.
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