Should You Purchase Business Interruption Insurance

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If you own a business consisting of a building with contents that include tools, equipment and furniture, then the need for business interruption insurance is essential. This insurance will cover losses of revenue and income that is generated by the business.

A business income worksheet should be completed each year to determine if your business needs any additional insurance. You can do this by consulting with a local insurance agent in your area when your existing policy is up for renewal. The agent will ask you questions about the amount of business revenue and the expenses that need to be paid.

One coverage that is included with this insurance is business income coverage. This is a coverage that pays for the replacement of lost earning when a business is closed due to damage. When a claim is filed for this coverage you may need to provide all business records, bank statements and any expense reports, if needed.

extra expense coverage

Another coverage that is included with business interruption insurance is extra expense coverage. Extra expense coverage is used to relocate a business to a temporary location to continue normal business operations. 

Various other expenses that you will incur include leasing equipment, rent for the building and the restoration of business records. Electronic equipment is also covered if it is needed to process payments and issue checks.

optional coverage

Optional coverage that you can include with this insurance is ordinary payroll. Ordinary Payroll coverage is used for you to continue issuing paychecks to employees while your business is being restored. 

The usage of payroll coverage can prevent trained employees from leaving and accepting another job, This coverage shows that you are planning for not only your business but also employees when the business has been closed or shut down due to damage.

Insurance can be purchased as a standalone policy. However, this is also coverage can be added to an existing policy as endorsement for business property or for general business insurance. 

business needs

A business needs to be analyzed to determine potential losses before this insurance is purchased or added to a policy. This includes funds used as a cash reserve if your business is not currently operating.

If you do not have this insurance for your business, then you will need to pay for all of the expenses required to keep it up and running. Many small business owners may not have access to available funds when their business is not operating. Purchasing insurance coverage may offer you piece of mind should damage occur to a building for your business.

A business is a major investment and proper insurance coverage is required to protect assets from any potential loss. Paying for expenses while waiting for a building to be repaired or rebuilt can be done by coverage that has been provided by a business interruption insurance policy. 

Additional expenses that you will incur for a business include utility payments, mortgage payments and vendor payments. Make sure that expenses that are paid for a business are covered when a loss occurs to your property.