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Fire & Water - Cleanup & Restoration

What To Know Before Buying Business Interruption Insurance

8/25/2022 (Permalink)

Business Interruption Insurance Application Form This is why you also need to purchase business interruption coverage.

What To Know Before Buying Business Interruption Insurance

You probably purchased property insurance before opening your company. This insurance can help you replace any items destroyed by a broken pipe or another disaster. However, large water damage does not just harm physical assets. If your building is affected by flooding, you may have to temporarily shut down the premises while emergency cleanup professionals do their work.

This is why you also need to purchase business interruption coverage. This insurance assists with various operating expenses incurred while your building is closed for restoration. You can use business interruption insurance for:

  • Loan payments
  • Rent, lease or mortgage payments
  • Lost income replacement
  • Payroll
  • Taxes

Business interruption coverage typically kicks in two to three days after the damage occurs. Each claim usually provides payments for up to 30 days. Here are some more things to know about this type of insurance.

Extent of Coverage

Not every disaster is included with business interruption insurance. Damage caused by earthquakes or flooding is covered under a separate policy. The policy also may not reimburse you for utility payments or undocumented income losses.

Cost

The cost of business interruption insurance is based on several factors. Obviously, more extensive coverage will come at a higher expense. Estimate your future profits based on projections and gross earnings. You can then use that amount to decide how much insurance to purchase.
The price may also vary based on the size, type and location of your business. Businesses in high-risk cities or industries could cost more to insure.

Endorsements

You may also want to add some endorsements to your business interruption policy. You can purchase extra expense insurance to cover expenses such as overtime payments and hardware replacement. You can also ensure some of your dependent properties that you do not own, such as manufacturing locations and suppliers' headquarters.

While business interruption insurance does not cover flooding, many other disasters are included in this type of policy. It is thus a worthwhile expense that can help keep your Boca Raton, FL company running during restoration.

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