Business Interruption Insurance for When Work Must Stop

Business interruption insurance is available for those times in which unexpected events prevent your business from operating effectively.

What You Should Know About Business Interruption Insurance

As part of your business insurance coverage, you are protected against loss related to fires or other unexpected losses. Business interruption insurance is the term used for the coverage that includes a loss of income during a period when your company facilities are unusable and business cannot resume in any other manner. Repairs that have to be done following a natural disaster, for example, would temporarily disable normal business operations if the premises has to be vacated. This would be a cause to claim your business interruption insurance.

Business interruption insurance may also cover added expenses related to restoring your company to a fully operation state. Compensation can be used to prevent temporary suspensions in regular business functions or to at least minimize the length of time that normal operations are suspended.

A waiting period, or period of restoration is allowed so that a business can take the time to prepare to resume regular functions. During this waiting period, a company that has been interrupted can rebuild, repair or replace equipment, furniture or the building that was lost or damaged. If the building is not salvageable, this period of restoration can be used to account for the length of time that it takes a business to relocate.

It is important to note that a business interruption insurance claim may be reduced by non-continuing expenses. Non-continuing expenses are costs that a business normally incurs when fully operational, but have ceased during a period of restoration. Such expenses could include electricity, supply purchases, delivery costs, phone lines and other common operating costs.

Claiming Business Interruption Insurance

In order to prove your loss and claim your coverage, you will need to provide certain documentation. Hopefully, this information is stored in a place other than your main facility, or at least copied through some sort of backup system. Here are some important records that you should produce to assist in supporting your claim:

  • income statements
  • profit and loss records
  • tax records
  • non-continuing expense records
  • any other documents that prove loss
  • any documents that prove costs related to resuming business
Be sure to maintain accurate records of any profits or loss during your period of restoration. The more accurate your records are, the easier the process of making your claim will be.

blog comments powered by Disqus