Business Interruption Insurance
Business interruption insurance covers losses due to interference in your business' services, like a natural disaster.
No one wants to consider the possibility of their business temporarily closing its doors. However, disasters like floods and fires can force you to close your physical space. Loan payments, taxes, employee salaries, and other expenses still need to be paid, so that loss of income can have a devastating effect on your business.
Business interruption insurance is meant to protect small businesses when physical loss or damage forces them to suspend operations. Does your current commercial property insurance policy cover business interruption? Do you know what’s covered under these policies, and what’s not? This short guide will help you understand everything you need to know about business interruption insurance. Let’s get started.
Business interruption insurance is a kind of insurance that, as the name states, covers interruption to your business’ services caused by a direct physical loss or damage. Basically, that means your insurer pays claims if a fire or other disaster disrupts your ability to operate and generate income. Examples of events that are typically covered include:
You may find business interruption insurance in your commercial property insurance or in the property coverage in a business owners policy (BOP). In either case, business interruption coverage is only triggered by perils already covered by the primary policy unless you upgrade your basic policy to get broader coverage.
To understand your business interruption insurance policy, it’s important that you read it, and if you have questions, speak to your licensed agent or broker. That said, the intention of these policies is to cover your lost revenue and expenses while your business relocates, conducts repairs, or temporarily ceases all operations.
Depending on your policy limits and the specifics of your terms, your business interruption insurance may cover full or partial payments on:
Your business interruption insurance can help you cover costs that you cannot meet while your operations cease so that a temporary pause doesn’t become a permanent closure.
While business interruption insurance can help you cover many of the costs associated with temporary closure and relocation, it’s important to note that it leaves out the costs of damage and repairs. Let’s look at some examples:
In short, for damage to your business assets including your equipment, your vehicle, or your office (if you own it), you’ll need another kind of insurance. You may want to consider commercial property insurance and auto insurance for damage and loss-of-use related to your business assets.
Small business owners often get business interruption insurance in their business owners policies. This bundle of general liability insurance and commercial property coverage for small business owners typically starts at $25 per month. However, that price varies because insurance companies evaluate several factors when determining your premium, such as:
If you are a tenant, you can opt out of building coverage and get a Business Owners Policy that only includes Business Content Insurance.
How long does your business need to close before your insurance kicks in? What else should you know about its terms and limits? To understand your business interruption insurance, you’ll need to understand the following terminology:
Let’s take a look at an example.
You’re a music teacher and the pipes burst in the studio you rent, damaging your drum kit and preventing you from giving lessons. The total cost of lost wages and relocation over the course of three weeks is around $10,000. You have a Business Owners Policy with a $1 million limit, a $5,000 deductible, a 72-hour waiting period, and a one-year restoration period.
Natural disasters and government shutdowns aren’t the only events that can put you temporarily out of business. In addition to business interruption insurance, most businesses need general liability insurance and professional liability insurance to protect them against client and third-party claims of property damage, bodily injury, and professional advice that causes a financial loss to a client.
Getting a BOP via Thimble is hassle-free. Download the Thimble app or click “get a quote.” When you enter your ZIP code, and a few details about your business, our customer service professionals will guide you through the rest of the process. Get your quote and purchase within minutes, and your Certificate of Insurance (COI) will be ready for you instantly on your app and in your inbox. And if you need professional liability insurance, you can get your quote and purchase with just a click.
Every small business takes on risks when opening. However, your business is vital not just to you, but also to your community. To make sure you can survive the obstacles that come your way, Thimble makes it easy to purchase a BOP that automatically includes business interruption insurance.
After all, the more protection you have, the easier it is to focus on what matters—scaling your business.