Of course you are in business to make money, that’s only logical. However, what happens if some catastrophic event takes place, forcing you to close your doors either temporarily or permanently? Unless you carry what is called ‘business interruption’ insurance cover, you may suffer extreme losses. In fact, sometimes the loss is so extensive that it can put you out of business permanently. Here is what you should know and why it pays to have the best business interruption cover available.
What Exactly Is Business Interruption Insurance Cover?
As the name implies, business interruption insurance covers those losses that are a direct result of some event or circumstance that forces you to close your doors. Revenue lost as a direct result can, and should, be refunded if you have the right kind of policy stipulating that you are covered for that particular loss.
What to Look for When Choosing Business Interruption Cover
Here is the problem many businesses encounter regarding financial losses. They don’t read the inclusions and exclusions in their policies and as a result, have not purchased broad enough cover. To get the best cover possible, here is what you should be looking for:
Operating Expenses (Fixed Costs) – These are those expenses that occur each and every month and will still need to be paid even though you are not operating at the moment, resulting in a lack of revenue being generated to pay those bills.
Profits – This covers profits that would have been made if the business was still operational and the amount is based on a previous amount of time, weeks, months, and in some rare instances, for an entire year. Each insurance company determines the parameters.
Temporary Location – If you need to operate out of temporary premises until your current location can be repaired or until you find a new location, you can be reimbursed up to a certain limit for a certain period of time. Make sure to get the maximum cover here as it could be sizeable.
Government Ingress/Egress – There are times when the government literally forces you to close your doors due to public curfews or events that are occurring in your vicinity. The government isn’t going to pay you for your loss of revenue, that’s for sure. Make sure you have this cover, no matter where your business is located.
Extra Expenses – Some costs may not be a typical part of your budget but are incurred as a direct result of your loss. This amount can be limited and the types of expenses may be limited as well. Even so, it is a good provision to have.
Make absolutely certain that your policy covers each of those stipulations and that your maximum cover is enough to cover those expenses for a predefined period of time. Here you want to consider the worst case scenario. Therefore, make sure the time limitations are extended out to the longest period your insurance provider will cover.
How to File a Claim
In the event that your business suffers loss due to any type of provision covered, i.e. fire, flood, theft, wind and storm damage, it is important to know how to file a claim. One thing to be aware of is that insurance companies want to make a profit just as you do. They will try to pay you the lowest amount possible. For this reason, many business owners hire independent insurance adjusters that will work on your behalf to assess accurate valuations to compensate for your losses. In other words, they work to get you the most money possible based on the level of your cover.
If you are in business, don’t let a major catastrophic event put you out of business. With business interruption insurance, you can get compensated for loss of business revenue that isn’t covered under your property insurance policy. It pays to make wise choices in advance. You know what they say about an ounce of prevention – so take that into consideration before it is too late.