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Do I Need Business Interruption Insurance?

April 5, 2007

The events of September 11 and Hurricane Katrina showed us, business interruptions do happen, though not always on such a large scale. If a catastrophe, such as a fire, causes your place of business to be temporarily unusable, your business may have to relocate or even close down for a while. Business interruption insurance is designed to help in these situations. 

Typically, business interruption insurance is part of a package, or is added when purchasing property insurance. Business Interruption Insurance Covers:

• Profits you would have earned, based on your financial records, had your property not been damaged by the covered disaster.
• Operating expenses, such as electricity, that may occur even if the main business activities are temporarily stalled.
• Some policies cover expenses incurred from operating out of a temporary location while the original premises are being repaired.

Many types of businesses find it harder to purchase business interruption coverage because of its cost. Drycleaners, for instance, use various chemicals and heating equipment, resulting in a greater likelihood of property damage. Businesses with special risks may not be covered for business interruption in their BOPs and should contact their agent.

Small business experts urge entrepreneurs to research their options in the realm of business interruption insurance and select the one that works best for them. When contacting your agent to determine if you are covered for business interruption, remember to check if your BOP excludes damage that is covered by special policies such as windstorm (often sold as a separate policy in Florida), earthquake, and flood.

Posted by Shanu Singh Guliani on April 5, 2007 | Comments (0)