Business Interruption Insurance
Business Interruption Insurance, also known as Business Income Insurance, is a type of insurance that covers the loss of income that a business suffers after a disaster. This interruption must be a result of physical damage to insured premises due to a covered peril. The income loss covered may be due to closure of the business facility or due to the rebuilding process after a disaster.
Key Features:
- Coverage for Profits: Reimburses the insured for the profits that would have been earned based on previous financial records, had the disaster not occurred.
- Fixed Costs: Covers operating expenses and other continued costs of doing business.
- Temporary Relocation: Some policies include coverage for moving to and operating from a temporary location if the primary premises are unusable.
- Extra Expenses: Covers reasonable expenses (beyond the fixed costs) that allow the business to continue operation while the damaged property is repaired.
- Extension of Coverage: Includes civil authority ingress/egress, service interruption, and limited coverage for newly acquired locations.
Important Considerations:
- Duration of Coverage: Business interruption insurance usually includes a restoration period that is predefined, often ranging from 48 hours after the damaging event happens until the damaged property is repaired and returned to normal operations.
- Scope of Coverage: The coverage precisely relates to and depends on the premises being physically damaged and is accordingly oftentimes part of a broader commercial property insurance policy.
Helpful Resources:
- A comprehensive guide to understanding this type of insurance can be referenced in the ____ (include relevant policy guide).
- Familiarization with related statutes and regulations can substantially assist with claims: For U.S. policies, refer to details provided in the International Risk Management Institute’s resources or specific state governance on insurance policies.
For many businesses, significant harm from unexpected events like natural disasters could greatly hinder or fully stop their operations. For this reason, securing an adequate Business Interruption Insurance policy is critical in safeguarding continued business stability and financial standing.
