Why should I purchase business interruption insurance?

Business interruption insurance (sometimes called business income insurance) can make the difference between “life and death” of a business following a catastrophic loss. It can be as vital to your survival as fire insurance on your buildings and personal property.

Most business owners would never consider opening a business without buying insurance to cover damage due to fire and windstorms. But too many small business owners fail to think about how they would manage if a fire or other disaster damaged their business premises so that they were temporarily unusable. A business that has to close down completely while the premises are being repaired may lose out to competitors. A quick resumption of business after a disaster is essential.

Business income insurance compensates you for lost income if your company has to vacate the premises due to disaster-related damage that is covered under your property insurance policy, such as a fire. It covers the profits you would have earned, based on your financial records, had the disaster not occurred. It also covers operating expenses, like rent or mortgage payments, that continue even though business activities have come to a temporary halt. And, it pays for extra expenses you incur to expedite recovery or continue operations, such as a move to a temporary location.

Make sure the policy limits are sufficient to cover your company for more than a few days. After a major disaster, it can take more time than many people anticipate to get the business back on track. There is generally a 48-hour waiting period before business income insurance kicks in.

Business income insurance is surprisingly affordable. In fact, some package policies provide the coverage automatically without additional cost. Ask your agent for a proposal and premium quote.

This article was prepared and made available to your agent by the Independent Insurance Agents of Texas, which is solely responsible for its content. Please read your insurance policy. If there is any conflict between the information in this article and the actual terms and conditions of your policy, the terms and conditions of your policy will apply. The Independent Insurance Agents of Texas is a non-profit association of more than 1,800 insurance agencies in Texas, dedicated to helping its members succeed, in part by providing technical resources that explain insurance policies sold to their customers.

 

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