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Business Interruption Insurance
One of the most interesting features about insurance today is its versatility. Insurance history began in the days of the Crusader knights who would pay sums of money to have their belongings protected while they were away fighting the Infidel in the Holy Land. Today, insurance has been raised almost to an art form in the types of risk against which is seeks to protect the policy holder.
Business risk is no longer simply a matter of whether an enterprise would or would not make money. Now, many factors must be considered when setting up a commercial enterprise. Insurance companies provide ways of protecting against unexpected events that could potentially result in a business venture’s collapse.
One useful form of insurance cover is called business interruption insurance. This type of policy protects the holder in the event that a business process is broken due to a natural event such as a fire or flood. Such an event can make business premises unusable, and may require the relocation while repairs are undertaken. This type of insurance cover would permit business activity to continue covering the cost of relocation expenses and other requirements necessary to maintain an uninterrupted business flow.
Business interruption insurance, also known as business income insurance, is available in the event of such natural disasters. The insurance premium and the amount of insurance cover provided will be based on a range of factors including the profits the company earned prior to the company relocation as well as regular operating costs that the company had been paying prior to the disaster.
This type of policy is not stand alone, and is normally an additional option on a company property insurance policy. Policy’s will normally have a lag time of 48 to 72 hours before they are activated, allowing for some businesses that may be put back on the rails during that short time to re-establish themselves. Other factors such as business risk exposure to specific threats are also considered part of the premium equation. Business interruption insurance is not designed to improve your business in the event of a natural catastrophe, but it can certainly prevent it from collapse following such an event.
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