Does Your Company need Business Interruption Insurance

A threat that faces every business owner despite of location, industry, product or service, is one of business interruption after a disaster. Without the ability to continue business for an unclear period, the owner could face increasing debt, no income and they may even lose the ability to gain financial footing through their future business prospects.

Usually, business interruption insurance will cover earnings that a company will lose over a set period of time following an insurable event, such as a fire or hurricane. Some policies may also include:

·         Extra expense coverage: If you have to run your business out of a temporary location as you repair and rebuild, you may have extraordinary expenses, which would be covered under this benefit.

·         Contingent business interruption: It’s probable that the insurable occurrence which hurts your business didn’t actually have an effect on your business location, but that of your supplier. If your business experiences a loss due to an incident at your supplier’s location, then this would cover the damages within the specified period and limits.

Together, these benefits can help you to continue to pay payroll and meet your financial obligations while conducting your business in a temporary location or waiting out the repairs to your office.

Getting Coverage

You may be able to secure business interruption coverage through its own policy, or as a piece of your commercial property insurance policy or BOP (business owner’s policy). When applying, you should consider what your losses could actually be before you pick your limit. Consider your gross profits and think about potential sales losses in terms of future sales trends as well as current and past sales experience. Talk to your agent about how your gross earnings fit in with the insurer’s coinsurance requirements, because if you underinsure your insurer could penalize you when you have a loss by reducing your claim payout by the percentage that you underinsured, even if your claim is less than or identical to your limit.

In addition, consider the expenses that you will reasonably be able to suspend while your business is out of service. If you lease your space then you may not need to pay rent during the months that the area is inaccessible and being rebuilt. But you may be forced to pay rent again once the space is restored, even if you need to spend that time restocking.

Business interruption insurance can be a reasonably priced, but important piece of your Houston commercial insurance plan. Give us a call at 888-356-6448 today to talk about just how much it can help defend your business.