When it comes to business insurance, most business owners understand the basics of commercial coverage for their property and inventory, as well as the necessary liability protection in case of injuries or lawsuits. What many don't think about is the advantages of business interruption insurance. Here's a look at some of the things that you should understand about business interruption insurance.
Defining Business Interruption Insurance
Even if you've been thorough about protecting your company's capital investments and liability risks, you may not have given any thought to the effects of catastrophic problems. Whether it's severe storm damage, fire, or any other type of loss, you'll find that your commercial insurance coverage might address the repair and restoration costs, but won't cover the losses you incur due to the interruption in your business operation.
The longer your business is closed for repairs, the more revenue you're losing. That's why business interruption insurance is such an important investment. With business interruption insurance, you'll get reimbursed according to the policy terms for lost revenue due to a disruption in your business operations from a covered loss.
What Business Interruption Insurance Can Be Used For
Even if you understand the basics of what business interruption insurance provides, you might still wonder what you can use that money for. The fact is that business interruption insurance funds can be used for anything you'd use earned revenue for. For example, if you have employee salaries, employer taxes, or any other staff-related costs, your business interruption insurance funds can pay for that. This may allow you to keep your staff on the payroll even while the business is closed.
Commercial property costs are another thing you can use business interruption insurance payments for. If you have mortgage or rent payments to make or any other capital investment costs, your business interruption insurance can help. Not only that, but you can also use your business interruption insurance payments to cover other loans, supplier costs, and similar types of expenses.
How Much Business Interruption Coverage You Need
When you make the decision to invest in business interruption insurance, you'll have to determine how much coverage you need. Talk with your insurance agent about your company's financial obligations and the revenues that you're going to need to replace so that you can be sure that your policy benefit is sufficient for what you need.
These are just a few of the many things that you should understand about business interruption insurance. Talk with your business insurance agent today for more help.