Business Interruption Insurance is a useful tool for paying expenses and replacing lost income when your business is going through a tough phase. All businesses will have a time of peril and a time of success. When you are unable to handle your financial needs, you might an external hand of help. This is when business income coverage alias business interruption insurance becomes useful. This is an integral part of standard business insurance policies bought by owners. In this short post, you will read about how to use a business interruption insurance to push your company and recover from unexpected losses.
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Coverage offered by Business Interruption Insurance
As mentioned previously, this coverage aims to help you, when you go through a loss in income. Common perils covered by this insurance are falling objects, lightning, theft, fire or wind. However, the coverage offered differs from one insurance service provider to another. This is why you should read about the policy and its terms before signing on those dotted lines.
Here is a simple example to show how useful the business interruption insurance coverage is:
Imaging a massive fire burns all your merchandise and leaves the store inhabitable. If this happens a few days before major shipping, your business will be severely affected. In such a case, the interruption coverage will lend you a hand of help. The insurance will assist you in two different ways: for the income lost and the extra money you would need to make a shipment.
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In the above case, lost income would sum to the merchandise that got destroyed. If any merchandise has been shipped, it will be deducted from the insurance coverage. And, the extra expense sums to the amount you need for relocating your business to a safer place. The cost of the new place will be covered by the insurance policy.
How do you choose a coverage?
A lot of people a few puzzled when they have to choose interruption coverage. Just like every other insurance policy, this has a coverage limit. The maximum amount offered by the insurance company depends on many factors. Any loss beyond the coverage limit will be your responsibility. That is why you should stay alert a choose a sensible coverage limit. Here are a few questions to help you identify an apt coverage limit:
- Is the building rented or owned?
- How long would your business take to recover?
- Are the safety measures in your office functional and up-to-date?