What Are the Main Types of Business Interruption Insurance?
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Facts about the Primary Forms of Business Interruption Insurance

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Facts about the Primary Forms of Business Interruption Insurance

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Interruptions can put businesses in financial trouble, making business insurance essential. With the right coverage, your company may be entitled to compensation for missed rent payments, employee payroll, and other expenses affected due to a disaster that causes your company to shut down temporarily or lose income. Learning more about business interruption insurance can help you determine how it benefits your company or organization.

Policies

Business interruption insurance is also known as business income insurance or contingent business interruption coverage. The policies typically cover revenue you would make if your business were open as well as tax payments you generally pay monthly, quarterly, or yearly. Payroll for your employees is typically covered for losses due to property damage and other covered losses that prevent you from opening or operating normally. Relocation costs may also be included if you have to move to a temporary space due to the physical damages. Training costs for employees who need to learn how to use new machinery or equipment after the disaster could be covered.

What Is Considered a Disaster?

Although you may lose income for different reasons, business interruption insurance doesn’t cover every issue. There are stipulations regarding what qualifies as a disaster and what doesn’t. Therefore, it’s best to speak with a policy provider before agreeing to coverage. You should ask questions about what qualifies as a loss of income as well as the expense limitations. 

The main types of business interruption insurance typically deny coverage for losses due to earthquakes, mudslides, and flooding. However, you may be able to pay for additional coverage that includes these damages. Losses unrelated to property damage, such as a pandemic or viral outbreak, are generally excluded from these policies.

Eligibility

This type of insurance is generally available through your company’s property insurance policy. Smaller companies often bundle property, liability, and business interruption coverage. Some companies are home based, but in certain instances, providers may require businesses to have commercial locations. 

Various factors are used to determine the cost of the coverage, such as your annual revenue, the establishment of your business, previous interruption claims, the industry or classification of your company, and more. To add this to a current policy bundle, contact your provider.

Limits

You don’t need to purchase the highest business interruption policy. The type of insurance you agree to will depend on your business’s size, location, budget, and other essential details. Use your gross earnings when determining the type of coverage you select. Estimating future profits can also come in handy before you make a decision. 

If your business interruption costs exceed your specified limit, you may have to pay out of pocket for the additional expenses. Before making a selection, ask yourself questions like how long it could take your company to recover, whether the building is updated with safety features such as fire alarms, and, if necessary, whether you could cover the moving expenses. 

Owning a business involves assuming certain kinds of risk, but operating without business interruption insurance is a risk you shouldn’t take. For reliable, affordable business and commercial insurance as well as homeowners, renters, motorcycle, and car insurance National City, reach out to the experienced professionals from Altra Insurance Services. Call us today at (619) 404-6311 to find out how we can meet all your insurance needs.

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