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.