If a catastrophe, such as a fire, causes your place of business to be temporarily unusable, your business may have to relocate or even close down for awhile. Business interruption insurance (also known as business income coverage) is designed to help in these situations.
Business Interruption Insurance Covers:
Profits you would have earned, based on your financial records, had your property not been damaged by the covered disaster.
Operating expenses, such as electricity, that may occur even if the main business activities are temporarily stalled.
Some policies cover expenses incurred from operating out of a temporary location while the original premises are being repaired.
How to Purchase Business Interruption Insurance:
Business interruption insurance is not sold as a policy by itself. It may be added onto a property insurance policy or included in a package policy, such as a business owner's policy (BOP). Check with agents for different options.
Make sure your policy limits cover a sufficient amount of time to rebuild your business. It can take more time than anticipated after a major disaster to get your business functioning again. Generally, there is a 48-hour waiting period before the coverage kicks in.
The policy price is related to the risk of a fire or other disaster damaging your business premises. Factors that affect this are location, the nature of your business, and how easily your business could operate out of a temporary location.
What is Extra Expense Insurance?
Extra expense insurance reimburses your business for reasonable expenses beyond normal operating expenses that keep the business from shutting down during a post-disaster restoration period. Usually, extra expenses will be paid if they help decrease business interruption costs. Some companies may find extra expense coverage sufficient without business interruption coverage.