Business Interruption Insurance: A Good Investment?
Major disasters can mean your business must close temporarily, then rebuild its commercial momentum on reopening. Calamities, for instance like a Category 5 hurricane, can test the resilience of even the most successful, financially sound venture. To offset the often steep costs of a business interruption, business income insurance can help ease the economic pain as you reopen, regroup, and reestablish the daily business of business.
This insurance covers a variety of common business costs:
- Lost net income
- Mortgage, rent, and lease payments
- Loan payments
- Employee payroll
What's Not Covered?
Be sure to note what this insurance doesn't cover. Additional insurance may be needed for the following:
- Broken items (glass)
- Flood and earthquake damage
- Undocumented income (not listed in financial records)
Businesses with 100 or fewer employees and revenues up to $5 million are the norm. If yours is a small to midsize business, you can purchase a business owner's policy that combines property, liability, and BI coverage, which bundled together is typically more cost-effective than buying separate policies.
How Long Does BI Pay Out?
Business income (or interruption) insurance is usually limited to 30 days; however, extensions up to 360 days can further buoy up operations as your business works to rebuild its revenue stream. Typically, policies have an initial 48-to-72-hour waiting period before reimbursement.
How Much Coverage Is Enough? And How Much Does It Cost?
Consider your business' gross earnings and revenue projections to get a ballpark estimate of adequate coverage. Cost factors vary according to location, such as Elmsmere, NY, industry, employee count, amount of coverage, and your claims history.
Unfortunately, a sudden emergency and a closed business can leave you with lost revenue, ongoing fixed expenses and even new monetary outlays. Sometimes there's a need for damage restoration services before you can rebuild operations to pre-closure levels. Business interruption insurance can neutralize these financial pressures. Like any insurance, BI is an investment, a hedge against the risk of uncertain loss. It's worth considering.