Running a business exposes you to various risks that can harm your financial stability. While you may have insurance policies in place, it’s important to recognise that many of them are not designed to cover the financial losses that occur during temporary closures. That’s where business interruption insurance becomes vital, providing you with the financial protection that other policies fail to do.
What is business interruption insurance?
Business interruption insurance is designed to protect your business from a temporary interruption to operations. Whether your premises are effected by fire, flooding or a natural disaster, this type of insurance provides support by compensating for lost income or ongoing expenses during this time. The purpose of this insurance is to enable your business to resume normal operations following an unexpected incident, helping you to recover and rebuild where necessary.
What are the benefits of business interruption insurance?
There are a number of benefits to investing in business interruption insurance. Alongside filling in the gaps left by other insurance policies, this types of coverage also provides…
1. Financial stability
One of the main benefits of business interruption insurance is that it offers financial stability. This means that it covers the income that you would have generated had it not been for the interruption period. For instance, if your stock room is flooded and your products are damaged, you will still receive the income for these products. This ensures your business is able to meet financial obligations despite the interruption.
2. Expense coverage
Whether you own a stock room or a shop front, it is likely that you will need to continue paying the rent on your commercial premises throughout the interruption period. This includes if the premises are damaged during the incident. With business interruption insurance, you can cover the rent, minimising the financial strain on your business.
3. Business continuity
Recovering from an unexpected incident can take a lot of time, money and resources. However, business interruption insurance will help get your business back up and running. From repairing property to replacing equipment, this coverage will ensure you have everything you need to continue operating. This not only minimises the impact on your business, but also on your customers, stakeholders and employees.
4. Employee retention
In the event of a business interruption, you may have employees approaching you about their income stability and job security. However, business interruption coverage means that you and your employees have nothing to worry about. This insurance covers the cost of employee salaries, helping your business to retain employees throughout this challenging period. Keeping your existing workforce can also be crucial to the successful recovery of your business.
5. Peace of mind
With business interruption insurance, you can relax knowing your business is financially protected from unexpected events. It is hoped that this will allow you to focus on running your business, without worrying about the consequences of unforeseen events. From decision making to strategic planning, this peace of mind will provide you with improved business resilience.
