It can take a lot to get a business up and running. So what do you do if something unexpected forces you to shut down for a period of time? It can be an unsettling situation to think about. That’s one reason why it can help to learn about business interruption insurance.
What is Business Interruption Insurance?
If a fire or a natural disaster hits your business, your first concern might be repairing or replacing doors, windows, or other damaged property. But what about the money your business normally takes in? That’s where business interruption insurance can help by replacing income lost to a covered event.
Business interruption insurance is generally included as part of a business owner’s policy, also known as BOP insurance.
What Does Business Interruption Insurance Cover?
Along with covering money that’s not coming in, business interruption insurance also can help cover the money that’s going out for paying certain expenses, such as:
- Payroll
- Fixed costs such as operational expenses
- Loan payments and taxes
It also can help with other expenses you may incur while you’re getting your business back up and running, including:
- A temporary relocation
- Training costs on new replacement equipment
And just to be clear:
This coverage doesn’t extend to earthquakes, floods, or public health events. It also won’t reimburse you for utilities, undocumented income, or broken items.
What Types of Businesses Should Consider Business Interruption Insurance?
Since this coverage is part of a business owner’s policy, which also generally includes commercial property and general liability insurance, it can be a good choice for brick-and-mortar businesses with inventory and equipment, such as food businesses and retail stores.
BOP insurance is generally an option for businesses with fewer than 100 employees or less than $5 million in annual revenue.
What Does Business Interruption Insurance Cost?
Business interruption insurance usually comes as part of a business owner’s policy. It’s important to keep in mind that it’s often less expensive to bundle commercial property insurance, general liability, and business interruption insurance in a BOP than to purchase each of them separately.
Here are some other factors that can affect a BOP premium:
Your industry
Different industries carry different types of risks. A higher exposure to various risks could result in a larger premium.
Coverage limits
As with any insurance policy, the amount of coverage you elect will impact your insurance costs. For example, if you choose a higher level of coverage to take care of costly assets or specific risks, it will likely be reflected in your premium.
Location
Where your business is located — and where you conduct your business — matters. Different cities and states have different risk ratings.
Size and age of your business
The more employees you have, the more risk your small business typically faces. Additionally, newer businesses are often considered a greater risk than more established businesses. Both factors may affect the cost of your policy.
Property value
Much as with insuring your car or your home, the policy, the value, and type of your property will affect the cost of your premium.
Insurance history
Any previous claims will be taken into consideration when calculating your premium.
Protect Your Income and More with a Business Owner’s Policy
Thinking about a business interruption policy? A good place to start could be with a business owner’s policy. Along with protecting your income, BOP insurance can help take care of your property and general liability. Plus, a BOP can include optional coverages to help make it an even better fit.
Some coverages you can consider for BOP insurance include:
- Cyber insurance
- Employee theft coverage
- Spoiled merchandise (perishable goods) coverage
- Forgery coverage
- Equipment breakdown coverage
Since the types of coverages in a BOP can vary, you should pay close attention to the BOP product you end up purchasing and which types of coverage it includes.
Small business insurance is what we do.
We can help you get BOP coverage for your business. And we can do it in a way that works for your business. Want to get it done fast and easy, 24/7? Use our handy online quote tool. Have questions or want some help from a licensed insurance agent? We have a team of them available to talk with you Monday-Friday, 8 a.m. to 8 p.m. at 844-654-7272.
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That Feeling of Being Prepared
As a small business owner, you’re no stranger to challenges and obstacles. But the financial effects of a disaster can be wide-ranging. So can the mental and emotional ones. Having the right insurance in place can help you get back on your feet quickly, as well as compensate you for lost income, keeping up with expenses, and providing some much-needed peace of mind.