Business interruption insurance is designed to cover loss of income that a business may suffer if they have to cease trading for a period of time as a result of suffering a disaster event.

The cover can sometimes be overlooked by businesses who mistakenly believe that this type of cover will be provided by other insurance policies they have in place. Or by businesses who look to insure their more obvious, physical assets such as buildings they own or their office contents.

But what types of events does business interruption insurance cover your business against?

Flood

When we think of floods we often think of heavy rain and the associated events such as burst rivers. Whilst this is obviously one risk and something which can affect businesses situated within flood risk areas, other causes of flood can be more common. For example, a burst pipe which goes unnoticed or a damaged water tank on your premises can easily cause significant water damage.

Whilst stock which has been destroyed or office equipment which has been damaged due to the effects of the water can be replaced relatively easily, flooded business premises can take long periods of time to dry out and for the water damage to be repaired. 

Fire

Fires can have a devastating effect on businesses, particularly large fires which cause significant fire damage across premises. As well as the associated damage to the building itself, contents are also likely to be lost such as stock, IT equipment and expensive machinery.

Some policies may also provide cover if your business is not accessible following a fire in a neighbouring property, meaning you suffer interruption to the normal running of your business.

Vandalism

Suffering vandalism to your business premises is not just upsetting it can also impact your ability to work from your business premises. You may need to move out whilst damage is repaired meaning you need to stop trading for an unexpected period of time.

With your business premises out of action following any of these types of event, you are likely to suffer downtime in your ability to trade, meaning your income and revenue are likely to be affected. As well as the potential for your customers to go elsewhere to fulfil their needs or your staff to take up other positions. This is where business interruption insurance can help and provide cover over and above insurances such as buildings and contents policies.

All business interruption insurance policies vary, many will typically cover the events mentioned above but as always it is important to check the policy you are buying to make sure it meets your needs.