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Business Interruption Insurance

Business interruption insurance will make up the difference between a company's normal income, and its income if it has been forced to shut down. It is also often referred to as business income protection, out of business coverage or profit protection. There are many reasons why a business may be forced to shut down, to stop or limit some of its operations. This may be due to an accident or injury that causes a disability to a key employee, or even the owner. This may also arise due to a legal liability claim. A business many even need to cease trading due to property loss caused by fire, theft, vandalism or natural disaster.

You will generally find that small business owners and self-employed people are at a far greater risk of loss of income that may be associated with a forced shutdown. Typically, in this type of situation you may find that a business owner has invested a great deal of money into their business, and if operations are unable to continue this may cause an extreme financial hardship.

There are various types of insurance policy which can provide a business with protection against specific risks. These insurances include property, disability, and liability, although none of these policies will specifically cover the costs that are associated with indirect losses. A prime example of this is a small business suffers a loss due to property damage caused in a fire. They may be forced to shut down for a period of time, or even move to a new location on a temporary or permanent basis. Property insurance will typically cover the cost of repair or to replace the building, although there is no protection for loss of income.

In such a situation the business will generally still have to pay expenses in order to continue. These expenses will include salaries, loan payments, and taxes. There may also be additional expenses such as rental income for a temporary location, or even employee overtime. It is also likely that a business will find that their revenue has dramatically decreased while they are in temporary operational shutdown. You may even find in certain instances that a business's clients may start to establish relationships with their competitors.

This is where business interruption insurance is able to fill the gaps that are left by property, disability and liability insurance policies. This type of insurance policy will be able to pay for a business's ongoing expenses which may include rent, mortgage, electricity, heat, phone, taxes, and maintenance. A business interruption insurance policy will also be able to compensate the owners/shareholders for any revenue that may be lost during a shut down. You will even find that there are certain policies that are able to cover employees' salaries.

A business interruption insurance policy will cover for lost income, although it may be extremely difficult to predict the future profitability of a business. This is especially true of a small or new business. In this instance, the payment will generally be based on the previous year's results. This information will usually be gathered from a company's tax returns or their own records.

A business interruption insurance policy is also able to provide a business with income protection in the event of an accident or injury that may cause a disability to a key employee or the owner. This is usually combined with a basic individual disability insurance policy. The benefits of this type of policy will usually begin anywhere from one month to one year after the onset of the disability. This type of policy may last for up to 2 years, or even the remainder of the person's life, and will typically pay up to a maximum of 70% of the individual’s income while they are unable to work.

Business interruption insurance is also available to small business owners who rely largely on the Internet. This type of policy is able to cover any disruptions that may occur, such as hacker attacks, which often referred to as a denial of service incidents. If a company relies heavily on Internet sales, this can be a cause for particular concern. A business interruption insurance policy in this case will generally cover the cost of sending experts and IT consultants to the company in order to stop these attacks. It is also part of their service to determine how to prevent any similar future attacks. This type of insurance can also be extended to provide protection to businesses who suffer from any other type of telecommunications failure.

The principal aim of a business interruption insurance policy is to allow a company to resume their operations in a timely and efficient manner. However, should a small business ever be forced to shut down for a long period of time, it is down to the business owner to determine how helpful this type of insurance policy will be based on their current circumstances. Often with the costs and time that are associated with a severe business interruption, it may be extremely difficult for a business to stay afloat.

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