Business insurance can help your business make up for any losses it suffers due to a covered disaster.
Standard business property insurance covers physical damage to the structure upon which your business resides. Furniture, equipment, and walls destroyed in a fire, storm; stolen, or vandalized. This coverage can help pay the cost of replacement and construction, but what about the financial losses your business suffers while its doors are closed? Having a meeting in a building that’s been burnt to a crisp is not recommended. Business interruption insurance can help make up for the lost revenue during this closure in order to keep your business afloat.
Business Interruption Insurance
When your business must shut down unexpectedly, your business loses revenue. Things like fire, windstorm, theft, and other covered disasters can all be the cause of such a closure.
In many cases, your business is still obligated to pay its bills, but without business interruption insurance, it’s going to be difficult, if not impossible. Business interruption insurance can cover the following losses.
- Fixed expenses like rent and utility costs.
- Lost revenue due to the event that caused the closure.
- Expenses of operating your business from a temporary location.
Your policy may also cover additional expenses associated with the temporary shutting down of your business. For example, it can also pay for the advertising to announce your temporary location.
In order to best determine how much business interruption insurance you need, one must establish what the business would have earned had the event not occurred in the first place. Insurance companies look at past earnings during the same time, tax returns, and profit and loss statements.