Home » How Does Business Interruption Insurance Work?
May 16, 2023
Mequell Green

How Does Business Interruption Insurance Work?

Your business’s profits and growth depend on operations functioning as expected. Unfortunately, even the most diligent companies may eventually have to manage incidents that derail normal operations. Even a brief pause or adjustment in your operations could lead to significant financial losses. So your company should prioritize acquiring and maintaining a suitable business interruption insurance policy.

How Does Business Interruption Insurance Work?

Also known as business income insurance, business interruption insurance can provide critical financial assistance in response to covered incidents that have an adverse impact on your company’s operations. Although the specific details of your policy may vary, business interruption insurance can generally provide coverage for the following expenses and losses:

  • Lost revenue
  • Mortgage, rent or lease payments
  • Employee payroll or wages
  • Tax payments
  • Loan payments
  • Temporary relocation costs
  • Employee training costs (e.g., if an interruption requires workers to learn to use new equipment)
  • Utility payments

Business interruption insurance is often included in a business owner’s policy, which may be a desirable option for small- and medium-sized companies also seeking general liability insurance and commercial property insurance.

How Much Business Interruption Insurance Do I Need?

Your organization should work with a qualified insurance professional to assess its risks and circumstances as they pertain to potential business interruption coverage needs. Your business interruption insurance policy includes a coverage limit and the financial assistance you receive will max out at that amount. You should maintain enough business interruption insurance to recover from potential incidents.

When considering how much business interruption insurance to purchase, consider the following questions:

  • What is the condition of your business’s premises as it pertains to safety features (e.g., fire alarms, sprinklers, security systems)?
  • How long would your company need to recover from property damage that interrupts its operations?
  • Are there temporary locations near your business where you could readily relocate to limit your losses?

Business interruption insurance policies also include restoration periods. These clauses determine how long your coverage will continue to pay out in response to a covered incident. Once your policy’s restoration period has expired, you will no longer receive financial assistance.

Get the Right Coverage

For over 25 years, the dedicated insurance professionals at the Mequell Green Insurance Agency have helped individuals, families and businesses in the greater Richmond area acquire and maintain optimal insurance portfolios. Our agents have the knowledge and experience to assess your needs, explore your options and craft ideal policies. Visit our website or call one of our offices today to get started.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.


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