Understanding Business Interruption Insurance
Interruption insurance is a good thing to have in the face of a disaster. It is a good way for business owners to stay financially stable when they need to rebuild their company. Here are some things you should know if you are considering adding this type of policy.
What It Is
This type of premium is available to help cover business expenses during disasters. It only pays out if there is a disaster that forces a business to shut down and rebuild. The amount a policyholder receives is based on the coverage they pay for and past financial records.
What It Covers
While it won't pay to rebuild your business in Royal Oak, MI, there are a few crucial things it covers. These include:
- Fixed costs
- Temporary location
- Commission and training costs
- Extra expenses
- Civil authority ingress and egress
- Employee wages
- Loan payments
What It Doesn’t Cover
Interruption is not a substitute for flood or property insurance. Therefore it does not cover broken items, flood damage, undocumented income, utilities, or communicable disease-related shutdowns.
Payouts for Policyholders
Your insurer is only required to pay if you have actually sustained a loss from a shutdown. The amount you receive will be based on your loss and your coverage limit.
This Insurance and Pandemics
One thing that has come under scrutiny recently is how this insurance works for a closed business that shut down due to a pandemic. Unfortunately, most policyholders do not get their expenses covered since no disaster caused them to shut down and storm cleanup professionals to be hired.
Business interruption insurance is a good idea for any company. It can help you remain financially stable amid a disaster that forces your business to shutdown. However, this is not a standard policy and will not cover property damage. It is also not able to pay out if the reason you shutdown is due to a pandemic.