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. It 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 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. During that time, business interruption insurance would help cover your regular business expenses such as rent or your employees’ salaries.
While your commercial property coverage may help cover the repair and replacement costs of your damaged or stolen property, without a source of income during that time, you may find your business ends up bankrupt or unable to reopen. Without a sufficient reserve of funds, you would rely on your business interruption insurance to help replace income which was reduced (or lost) due to the interruption.