Business Interruption Insurance: Your Lifeline
What’s The Risk of Business Interruption?
Hurricanes happen every year. Fires start in the blink of an eye. Cyber-attacks can wipe out all of your data.
Have you ever wondered what you would do if the unthinkable happened and you had to shut your doors for an extended time, or worse…for good? How would you cope with lost profits, replacing all of your equipment, or meeting supplier and loan payments? Is there any way to prevent such a devastating loss?
Business closure can happen as a result of natural disasters like hurricanes, landslides, floods and crippling cyber-attacks, to smaller, isolated crises of fire, burst pipes and power outages. The losses can be immense, but they can also be avoided.
It pays to be proactive; having a business continuity plan that includes Business Interruption Insurance means that your organization can recover sooner, with minimised negative impact to your operations.
Business Interruption Insurance is your lifeline.
What is Business Interruption Insurance?
While traditional property insurance will give you funding to rebuild damaged property or recover stolen goods, it does not offer financing for long term losses from direct and indirect operational challenges. Business Interruption Insurance is a type of insurance that covers the spectrum of loss that a business suffers due to an incident.
This can include profits you would have earned, rental of a temporary location, staff wages, replacement equipment, and your expenses such as loans, commission and trading costs. Costs that would have otherwise crippled your business at its most vulnerable point are instead covered by your insurance policy.
Did you know?
Business Interruption Insurance also makes it possible for you to meet any contractual obligations which you might have undertaken prior to the disruption, by providing for extra expenses and additional costs which you may incur to continue operating.
Read more on surviving a business loss.
Types of Business Interruption Insurance
There are several sub categories which include Standard BI, Contingent BI, Non-Damage BI and Data Driven BI. Here’s what each one means:
Standard Business Insurance: Insuring loss of income and ongoing costs as a result of property damage to an owned business facility.
Contingent Business Insurance: Reimburses lost income and ongoing costs and extra expenses resulting from an interruption of business caused by a property damage at the premises of a customer or supplier.
Non-Damage Business Insurance: Insures loss of income and ongoing costs from interruption of business caused by situations where there is no physical damage to the insured, supplier or customer and there is no BI claim to be made. This coverage indemnifies a business for lost revenue due to disruption.
Data Driven Business Insurance: Insures loss of income and ongoing costs from interruption of business due to unavailability of data and computer systems caused by hacking, technical failure, or human error.
The increasing frequency of data disruptions mean that having Data Driven BI becomes even more imperative. Cyber incidents are some of the most feared causes of business interruption after fires and explosions, natural catastrophes and supplier failure.
How Much Does Business Interruption Insurance Cost?
To calculate your premium, we consider your projected income, the period of restoration and projected lost income and operating expenses during the period of restoration.
Tip: Store Important Records Off-Site and Electronically
We’ve seen that a significant challenge post-disaster is record recovery for continuity and insurance claims. If business owners have Business Interruption Insurance, one thing you will need to have at hand to be reimbursed for losses is well stored company files. In today’s digital era, it is much safer to keep files in off-site data storage and cloud technology.
Most Businesses Don’t Have Adequate Coverage…Yet
We plan to improve that figure.
See more stats in our article on why Barbadian businesses need to protect against business interruption, and get in touch for a free quote.
If you’re ever unsure about how to make the best decisions for your business, don’t guess. Talk to us today about Business Interruption Insurance.
