Protecting your bottom line with business interruption
Making sure your building and inventory are insured is a no-brainer. But what business owners may not have considered is insurance to cover the loss of income after a disaster. That’s where business interruption insurance comes in, to ensure a business owner can still collect the income they would expect were it not for the event that set their business back in the first place!
Business interruption insurance will replace a source of income that’s disrupted, reduced, or completely eliminated if a covered peril suspends your operations.
Business interruption insurance will replace a source of income that’s disrupted, reduced, or completely eliminated if a covered peril suspends your operations. The insurance also includes coverage for extra expenses to expedite your return to business or help limit your loss.
So, what would that look like, exactly? Well, say you’re a small manufacturer who creates your own products, and your business suffers a break-in. You discover that the thieves have taken all the equipment you need to produce your goods. After a loss like that, your business will need some time to recover; you’ll need to replace that equipment in order to get back up and running at your regular speed. During that time, business interruption insurance would cover business expenses like rent or your employees’ salaries.
While you may be able to have your insured physical property replaced or repaired, without a source of income during that time, you may find your business ends up bankrupt or unable to reopen if there isn’t sufficient money to replace that income which was reduced (or lost) due to the interruption. That’s why business interruption insurance is so important.
Contingent business interruption insurance is an extension of your coverage that can reimburse your lost profits and extra expenses caused by an interruption to a customer’s or supplier’s operations.
Your business isn’t only affected by what happens directly to you. That’s why Federated also offers contingent business interruption insurance.
Your bottom line can suffer when businesses you work with experience issues. For instance, say one of your suppliers has a big fire shutting down their operations: it may take you some time to find a new supplier for the particular product they were providing you. Contingent business interruption insurance is an extension of your coverage that can reimburse your lost profits and extra expenses caused by an interruption to a customer’s or supplier’s operations.
While you can’t control what happens to the businesses you work with, you can control how your company reacts to a setback.
Who needs business interruption coverages?
Everyone! Well, maybe not everyone, but certainly anyone who owns a business. This includes businesses running at a loss as well as non-profit organizations, because even if you are losing money (and thus don’t have any profit to insure), you still have expenses to pay.
Can we help you with risk management?
Yes! Our Risk Service Specialists can work closely with you to provide the advice, support, and training you may need to analyze the potential risks to your operation. Knowing the exposures your business could face can go a long way in helping you avoid future losses.
Our Risk Services Specialists are available to help create a customized action plan that will address those issues and help you protect your bottom line. Whether it’s sharing our risk management observations on your current business, potential new locations, and business acquisitions, or providing you with timely tools and resources, we’re here to help you be as successful as possible.