Business Interruption Insurance

Cover your downtime when disaster strikes
By Mindy Toran, Freelance Writer Mindy Toran 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:

1. How much income do you need to continue operating your business in the event of a shutdown of your premises?
2. How quickly will the policy become active after you report an incident?
3. 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.
Try: The Insurance Information Institute offers helpful information on business insurance basics and how to purchase an insurance policy. You can also check out the 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.
Try: Insure.com offers a small business liability tool to help you determine your expenses and insurance needs.

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.
Try: Contact your insurance broker or agent to help you determine how much insurance you need. If you don't currently work with an agent, visit the Independent Insurance Agents & Brokers of America's website to find a broker familiar with your industry. MostChoice.com also offers good advice on the types of coverage available, policies and premiums. Or shop online. Start with InsuranceNoodle.com, a specialist in small-business policies. Also try LowQuotes.com, USInsuranceOnline.com or AllQuotesInsurance.com.

• 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.