The profitability or otherwise of businesses are subject to factors that are not always within the owner's control. For example, a natural disaster or any other peril can have a significant impact on a business. If a business experiences such circumstances, it will almost certainly suspend operations for some time. In such situations, how do business owners cover for the loss in income? Or do they resign and accept their fate? In such circumstances, business interruption insurance can be immensely helpful. Read on to understand what it is and how it can help your business.

What Is a Business Interruption Insurance Plan?

Business interruption insurance is an insurance type that compensates companies for lost income when normal business operations are interrupted. This interruption can come as a result of two things. They are:

• Any loss, destruction, or damage caused to the insured property
• A civil order to the company to cease operations

Why Do Companies Need Business Interruption Insurance?

This type of insurance is often overlooked. The reason is, many business owners erroneously believe that other insurance types, like property insurance, are enough. However, they usually find out the hard way that they don't. For instance, property insurance only caters to physical damage to property. On the other hand, business interruption insurance covers the business's income if the incident hadn't occurred.

What Events Does a Business Interruption Insurance Policy Cover?

Most business interruption insurance claims occur due to floods and fires. However, they are not the only two events that can elicit this claim. Other events include the following:

• Vandalism
• Burst pipes
• Windstorms
• Impact
• Theft

If the occurrence is significant enough to impact the company's ability to operate, it potentially qualifies it for coverage under this policy.

What Expenses Does a Business Interruption Insurance Plan Cover?

Business interruption insurance policies differ in terms of what expenses they cater to. However, the average policy will cater to the following:

• Lost profits
• Training and employee onboarding costs
• Rental equipment
• Taxes
• Salaries
• Rent or mortgage for the property
• Repairs to the property
• Cost of a temporary relocation, and many more

To fully utilize this insurance, ensure it is fully up to date with your business's earnings. Also, keep a proper record of every financial transaction your company participates in.

How Long Can a Typical Recovery Period Last?

Different insurance companies have other provisions in their policies for how long recovery can last. Typically, restoration is the period between when business operations are suspended and when repairs are completed. However, insurance companies usually outline any of the following:

• A specific recovery period
• A maximum recovery costs each month
• A maximum period of coverage

If you want, you can opt for extended coverage. With this, you will be granted the grace of getting coverage for the period between when property restoration is complete and when you resume operations. By the way, before you take a business interruption insurance policy, ensure the insurer clearly outlines what "suspension of operations" means. If they don't, you will be leaving yourself at their mercy as they can deny you coverage if you don't enact a total shutdown. So, be clear on the terms involved before you sign up. Will you like to give your business more protection against unforeseen occurrences? We can help. Our team of experts will guide you through the different available policies and help you select the most suitable. Contact us at Bell Black Insurance today.