What is business interruption insurance?
Business interruption insurance is an insurance product designed to cover lost income and revenue if your business is unable to trade following a loss caused by an insured event. For example, closure of your building premises following a disaster, or the downtime caused by rebuilding work, can mean you have to cease trading for an extended time period.
Whilst many small businesses recognise the need to insure their property against damage, and invest in insurance to protect their employees or themselves against liability claims, some may not factor in the costs associated with the inability to trade after disaster occurs.
Many small businesses can find themselves in difficulty if they are unable to trade because they do not have the resources to cope with the lost revenue. Business interruption insurance aims to bridge this gap, ultimately aiming to return your business to the same financial position you were in before the disaster happened.
Business interruption insurance can help in the following areas:
Does my business need business interruption insurance?
This will of course vary according to what you do and how your business is set up, but business interruption coverage is relevant for many business types. If your business carries a large amount of stock that could be lost in a flood or fire, if you need premises to work from or rely on a relatively small base of customers who may switch to a competitor whilst you’re getting back to normal after a disaster, it may be something you want to consider.
Also think about your overall insurance needs when reviewing your cover and ensure you have enough to not only cover your physical assets but also the costs of getting back up and running. In many cases, business interruption insurance can make the difference between a business surviving the effects of a disaster and having to close down completely.