There is a fair amount of uncertainty about business interruption insurance and what it entails. You might wonder what this insurance policy covers, and if you might need it.
At BIS Insurance, we have put together this simple to understand guide that explains business interruption insurance. Hopefully, this will help you figure out whether you need it or not. If you need further assistance, please feel free to contact your local office.
What is business interruption insurance?
Business Interruption insurance is there to cover your business in the case of financial losses sustained in a property claim. This is different from buildings insurance i.e commercial property insurance, which would only cover any physical damage to the premises.
Buildings and contents insurance will most likely not cover financial losses in the business, as a result of damage. This makes business interruption insurance very necessary for some.
Depending on the issue that occurs, having a business interruption policy in place can be the difference between your company surviving or going under. If your losses are protected, you might be able to get through the incident.
How do I obtain business interruption insurance?
Business Interruption insurance can’t be taken out as a standalone policy, but must be purchased with a Property Damage policy. This could be as a package or a combined policy.
For most Business Interruption Insurance claims to be valid, there will need to be a loss under the Property Damage section of your policy.
What does business interruption insurance cover?
Business Interruption insurance covers loss of income caused by events following an insured loss under your property damage policy. Examples include; flooding, burst pipes, a severe storm, physical impact (i.e a vehicle crashing into the premises), fires, theft of equipment, and vandalism.
A claim may be possible for businesses closed by the pandemic. For more information, speak to your insurance policy provider.
Is business interruption insurance a legal requirement?
No, it is not necessary that you have business interruption insurance for legal purposes. The responsibility is on the business owners to weigh up risks for the business and decide whether they want to obtain the policy or not.
Do I need business interruption insurance?
When figuring out if you need this type of insurance, you should consider if a large damaging event would mean the business would have to close for a long period.
For example, if you owned a television shop, which had a vast stock room of electronics, and you were located in a town next to a river. Due to a high flood risk that would cause damage to the stock, it would be a sensible move to take out business interruption insurance. In contrast, if you were someone who runs a business online from your laptop, you may not need this insurance, as if something were to happen to the laptop, it would be replaceable with a minimal cost.
If you would like further advice on business interruption insurance, please contact our team at BIS Insurance. We can make the complex simple.