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Fire & Water - Cleanup & Restoration

The Role of Business Interruption Insurance

10/25/2022 (Permalink)

Business interruption insurance form and red pencil to sign. Business interruption insurance (BI) can help you recover lost income after a disaster.

What Is the Function of Business Interruption Insurance?

Every business owner in Beaufort County has nightmares about their operations being interrupted by a disaster. The reality is that the likelihood of an interruption is far greater than most people would like to admit. Events such as fire, flood, and storm can not only damage or destroy your property but also disrupt your operations and cause millions in losses.

Business Interruption insurance provides coverage for lost income when you are unable to operate due to a covered event. For example, if you own a manufacturing plant in Florida which has suffered significant storm damage and cannot resume operations for 12 months; your business interruption insurance will cover the costs of renting space elsewhere while your building is being rebuilt or repaired.

What is business interruption insurance?

Business interruption insurance is a type of business insurance that helps cover the costs of your company if it’s forced to shut down because of a covered event. Business interruption insurance typically kicks in after a covered event occurs and continues for as long as necessary until your business can return to normal operations.

The coverage provided by business interruption insurance varies based on the terms and conditions outlined in each policy. Some policies may provide temporary buildings, salaries for management & employees, and other elements related to restarting operations once they have returned to normal levels.

What business interruption insurance covers

Business interruption insurance covers the costs of lost income and replacement business expenses that result from property damage, structural damage, or loss of inventory.

  • Lost income: Business interruption insurance will pay for lost profits or revenue because of a covered property damage event. This kind of coverage might reimburse you for the cost of hiring temporary workers to replace those who have been injured or can no longer work due to the disaster. It may also cover business start-up costs associated with moving your operations to another location after your main facility has been damaged by an insured event.
  • Replacement expenses: If your business suffers extensive damage from an insured event like fire or storm, this type of coverage can help cover the cost of repairing or replacing damaged property such as equipment, buildings (including inventory), and computer systems so that you're back up and running without having to worry about bills piling up while you're out of commission.
  • Temporary relocation: If there's no way you can run operations at all while repairs are being made at your building—for example if portions of it have been destroyed in a natural disaster—temporary relocation expenses may be covered under this type instead if they're related directly back towards getting your company back up-and-running ASAP instead!

Why you need business interruption insurance

Business interruption insurance (BI) can help you recover lost income after a disaster. You never know when something unexpected might happen, and if you're unprepared, it could be devastating to your business. With BI, you'll have a plan in place to help protect your business from unexpected events—whether they're natural disasters or other catastrophes that cause damage or force the shutdown of your operations.

Businesses need to be prepared for the unexpected. It's important that you have enough coverage to pay for repairs and rebuilds in the event of a catastrophe so that your company doesn't lose money while waiting for funds from an insurance company or government agency like FEMA (Federal Emergency Management Agency).

Business interruption insurance is a valuable product that can help you recover from unexpected events. If you are interested in investing in business interruption insurance, reach out to your insurance company to learn more!

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