If you’re wondering, the answer is yes.
You never know when your business may suffer from a crippling event. Whether it is a fire, tornado or other disaster that causes your business to come to a standstill, business interruption insurance could be your best friend.
Business interruption insurance (BII), also known as business income insurance, covers the loss of income you would have earned, based on your financial records, had the disaster never happened. In events that your building has been damaged but operations can continue, the policy also covers extra operating expenses that continue like, temporary labor, increase shipping costs and telecommunication costs.
BII differs from property insurance in that property insurance only covers damages to the actual building in which your business is located in.
Much like other types of insurance, the premium will differ from one business type and location to another, since it is directly linked to the probability of loss or damage to your premises.
The price would most likely be higher for a manufacturer than an insurance agency.
An insurance agency can more easily operate out of another location. While, for a manufacturer, the loss due to the company’s complexity is often very complicated to resolve. To get back in business for a manufacturer is much more difficult due to machinery, product, suppliers, and etcetera.
BII is not sold separately, but comes as an extension of property liability insurance or as a package deal.
Also, if you are dependent upon a major customer or supplier, when purchasing BII make sure the policy limits are sufficient by completing a business interruption worksheet. After a disaster, it can take longer than many anticipate getting their businesses up-and-running and back on track.
BII can be purchased if the organization location suffers a covered loss and it indirectly impacts your financial statements.
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