Having comprehensive Business Property Insurance that includes coverage for potential business interruption can prove to be essential for long-term growth. But only 17 percent of risk managers are extremely confident that their BI values and limits set are adequate, according to a 2017 RIMS Business Interruption Survey.
Another 41 percent of respondents to the RIMS survey said that their claim took at least six to 12 months to come full circle, with 58 percent citing difficulty quantifying loss during their claim. These numbers can be improved. But change takes action.
What can be done to alter some perspectives? The simple answer is this: take it back to the basics and learn business interruption insurance the right way. Down from the definition to the types of claims to look out for, here’s what businesses need to be aware of.
Breaking Down Business Interruption Insurance
When you purchase business property insurance, business income loss can be covered when adding an endorsement to the policy. That is business interruption insurance, which covers loss, damage or destruction of property owned by others, including suppliers and those receiving the products through the insured.
With this coverage, the main facet linking suppliers and receivers during business transactions will be covered monetarily in the event of some sort of accident involving the halting of daily business operations. However, those in multi-chain supply deals may find that they harbor some gaps in coverage, which need to be addressed separately.
Just like how a business needs fire insurance, a business is going to need insurance that covers them when business isn’t done right or when the business can’t function. That’s why adding an endorsement to your business property insurance is crucial. No one ever regrets being safe rather than sorry.
Do You Need Business Interruption Insurance?
If your business gets shut down, you’re not going to be able to make any money. That’s when you ask yourself this question: is this income loss going to bankrupt me? Even if you’re a bigger company, missing even a day of daily operations can be disastrous.
For example, if a disaster happens that pushes you to temporarily vacate the premises, this type of insurance would cover that. Even upkeep costs are covered, like electricity bills. Keeping a strong policy that can handle a few days of no work can be especially helpful in the long run.
Business Interruption Claims to Know
If you’re wondering what kind of claims can transpire with this endorsement on your business property insurance, the CPA Journal has a list compiled of the common ones:
- Catastrophic fears are heightened and aren’t going to get any better. With the constant threat of unpredictable, horrid weather, many business interruption claims come from natural disasters.
- Other business income loss stems from net-profits. What your business should’ve made while not running is another highly common claim. Claims are going to be lengthy and ultimately amount to a fair amount of money back.
If your business still feels underinsured, the next step would to add extra expenses coverage to your business property insurance. So if security is needed while your business is out of commission, extra expenses will cover those costs.
About Haughn & Associates
Founded by Michael Haughn in 1986, Haughn & Associates is a full-service, family-owned, independent insurance agency based out of Dublin, Ohio. H&A strives to provide the best possible price and unique insurance solutions across a myriad of industries, including construction, IT, Habitation & Commercial Property, Agriculture, and Engineering. Devoted to providing the best of business insurance, life and disability insurance, personal insurance, employee benefits, and bonds, H&A is proof that success lies in long-standing client relations and satisfaction. To learn more about how H&A can be of service to you, contact us at (877) 802-2278.