Have you considered what you would do in the case of a fire? I’m sure you are covered for the actual property damage, but would you be able to continue business as normal immediately? It's unlikely, so how will you make money?
You should be considering business interruption insurance for this. Business interruption insurance can be as vital to your survival as a business as fire insurance. Most people would never consider opening a business without buying insurance to cover damage due to fire and lightning. But too many small business owners don’t think about how they would manage if a fire or other disaster damaged their business premises so that they were temporarily unusable.
So what is business interruption insurance?
Business interruption insurance covers you for loss of income during periods when you cannot carry out business as usual due to an unexpected event. A business that must close completely while the premises are being repaired may lose out to competitors. Getting back up and running as quickly as possible after a disaster is essential.
Business interruption insurance aims to put your business back in the same trading position it was in before the event occurred. Business interruption insurance covers the revenue you would have earned, based on your financial records, had the disaster not occurred. The policy also covers operating expenses, like electricity, that continue even though business activities have come to a temporary halt.
Most policies will cover business interruption due to:
- Damage caused to your premises or equipment by fire, storm or flooding
- The breakdown of essential equipment
Your insurance policy may also cover:
- Additional working expenses incurred for maintaining normal business operations, following an incident for which you can claim, e.g. casual labour to help with clean up processes, repacking etc
- People/suppliers and customers not being able to get into your business premises after a period of 24 hours due to an incident to deliver or collect product
- Damage occurring at the premises of a supplier or customer that may impact on your business.
Some tips
- Business interruption insurance is not sold separately. It is added to a property insurance policy or included in a package policy.
- Make sure the policy limits are sufficient to cover your company for more than a few days. After a major disaster, it can take more time than many people anticipate to get the business back on track. There is generally a 48-hour waiting period before business interruption coverage kicks in.
- Make sure you keep copies of your financial records off site – how will you prove your income and costs without them in the event of a claim.
References:
www.iii.org
https://www.entrepreneur.com/article/224982
