- Protection from a financial standpoint in case of business interruption
- Ensures you have a backup plan to rely on
- Ideal for companies with a high risk of business interruption
- Helps you stay in operation even during tough times
There are so many benefits to running your own business. But there is always some level of risk associated with it, no matter how meticulous you are about everything. In fact, sometimes life gets to the point where you can not control what is happening around you or the impacts it is going to have to your business.
This is one of the reasons why you should consider getting business interruption insurance. Not only can it help you stay protected from a financial standpoint when things get tough, but it ensures that you actually do have a backup plan to leverage when you need to.
For instance, if you are a company located in a state where there is often a tropical weather season and hurricanes can wreak havoc, then your business is actually at risk of having to close if a storm rolls through. And you can not ever control the patterns or timings of a storm.
In short, business interruption insurance is a way to get help with any income that your company lost because you were not able to actually open your business for a period of time. This has never been more apparent than in the beginning years of the pandemic when many businesses had to shut their doors overnight and instantly lost valuable income. With business interruption insurance, you would be able to recover those costs and the revenue you lost as well.
When it comes to understanding everything to know about business interruption insurance and all the reasons to consider getting it, look no further than here. We have rounded up all the ways in which this type of insurance is worth it and how you can operate your company at ease because of it.
1. Covers Operating Expenses
One of the top tips when it comes to starting a business is to get business interruption insurance because it can directly cover operating expenses when there is a direct interruption to your company—which ranges from instances like theft and weather.
If you have business interruption insurance, you will be able to get a range of your operating costs covered. This can include the direct revenue you were projected to make if your business was open, any monthly mortgage or rent payments due, taxes, payroll for staff, and also training costs.
2. A Range of Businesses Benefit
There are a lot of different types of businesses that benefit from having business interruption insurance. This includes practically any small business owners who could be instantly suffocated if they lost their source of revenue.
Many other businesses that this is recommended for include restaurants, health and wellness centers, hair salons, and retail outlets—all of which need physical spaces to operate and depend on foot traffic for income.
3. Flexibility in Coverage
You do not have to pay the max to get business interruption insurance. In fact, nearly every policy will have a limit, and it is up to you to determine what makes the most sense. It is up to you to do your due diligence in forecasting the level of support you will need if things get tough and you can not open your business for a period of time that is outside your direct control.
To figure out the type of coverage that makes sense for you, you should plan out how long it will actually take to recover from various scenarios—like a robbery or a fire. You will also want to forecast what your alternative space would be and how much that place would cost to hire out in the interim.
4. Affordability of Coverage
Whether you are a small business or a large business, chances are you can afford business interruption insurance and find a policy that gives you the coverage you need for unpredictable times.
The policy costs range according to the provider you go with and the extent of coverage you are after. But the fact that many small businesses have business interruption insurance means that it is both affordable and worthwhile.
5. Kicks in Fast
There is generally a two to three-day wait for your policy to kick in when you need it to. This means that your policy will kick in to support you in just a matter of days, meaning you can get back and going in no time. Just make sure that you understand what the restoration period is upfront so that you understand how long your policy will have you covered.
6. Helps with Protecting Assets
If you have a physical store or location, then business interruption insurance can be essential when it comes to protecting your assets if something happens to the building. This could include events like fires and natural disasters that cause your business to temporarily close. Your policy will help you get back up and running in no time while also giving you the peace of mind that all of your valuable assets will remain safe.
7. Tax Benefits
For many businesses, getting business interruption insurance is not just about covering operational expenses—it is also about taking advantage of the tax benefits that come with it as well. Many states have implemented laws where businesses are allowed to deduct their insurance premiums for tax purposes, which can provide an additional layer of financial security for businesses looking to get the most out of their policy.
Overall, business interruption insurance is a valuable asset for any business owner who wants to make sure that they are always prepared in case something unexpected happens. While it might be difficult to think through potential disasters and plan ahead, having the right coverage can help you quickly recover and keep your business running regardless of what life throws at you. With its affordability and range of benefits, getting this type of policy should be at the top of any small business’s checklist.