What would happen if you had to vacate your premises due to damage from a fire, flood, hurricane or other natural or man-made disaster? How would you continue to operate your business and pay your bills? By purchasing business interruption insurance, you can protect your business from loss of income and continue to pay day-to-day operating expenses. When looking for a policy, which is typically part of your property insurance, you need to consider:
- How much income do you need to continue operating your business in the event of a shutdown of your premises?
- How quickly will the policy become active after you report an incident?
- Will you need additional coverage for extra expenses such as leasing temporary office space, computer equipment or office machines?
Determine your needs
What does it take to run your business on a daily basis? How much do you need to pay your rent or mortgage, salaries, utilities, taxes, telephone and Internet service? Knowing your risk is the best way to determine the type of insurance plan that is right for your business.
Small Business Administration's guides to purchasing business interruption insurance.
Put it in writing
Make sure your policy includes information about your business income, projected future income and the projected expenses your business will incur on equipment, payroll and securing a temporary operating facility.
Price your options
Premiums can vary widely, but coverage limits are generally 20 percent of the value of the business. You can also purchase dollar limits of coverage.
- Take a good look at all the interruptions your business might face in the event of a natural or man-made disaster.
- Decide whether or not your company can afford the loss of income and the expense of reestablishing your business without additional insurance.
- Make a checklist of your expenses and what equipment and services you'll need to keep your business running.
- Make sure the policy has a long enough time frame to get your business back on its feet.