Forming a business involves several aspects, including securing protection against unpredictable situations. Accordingly, business owners usually acquire business interruption (BI) insurance to protect their businesses from monetary losses due to certain events.
If you are a business owner who wants to know more about BI policies and how you can benefit from them, here are some things you should know.
BI protects you from income losses
Business interruption insurance protects you from monetary losses from temporarily suspending operations due to unanticipated scenarios, like equipment or property repairs. For instance, if you stop operations and temporarily close your business to repair any damages, your BI covers lost net income during that period.
However, this protection only generally covers income losses. Commercial property insurance is more appropriate for physical property protection, while general liability insurance covers protection against liability claims against the business.
The protection depends on the coverage
Your business’s protection is limited to damages or losses from events specified in your coverage. Hence, if you do not avail additional coverage for losses due to flooding or earthquakes, you will not have protection against them and will suffer income losses due to those events. Therefore, you need to specify which events you want to protect your business from.
The same applies to what kind of losses your insurance covers. Generally, BIs cover profit losses. However, it can also cover fixed costs, employee wages and other similar expenses.
Processing the claim
You can file a financial claim from your BI insurance once a covered event causes monetary damage to your business. The process can be complex, especially since your insurance company will likely be strict with your application and the coverage’s implementation. Therefore, it is best to evaluate the circumstances and diligently prepare for your claim. Having a dedicated attorney review your situation can help you find the best action for your case.