Business Interruption Insurance
Sometimes the unexpected happens. When it does, Business Interruption Insurance ensures that your profits and income are protected. If a fire breaks out on your business property, a storm causes operational downtime or a malicious break-in damages your business equipment, you could be forced to reduce or stop work. This can lead to significant financial consequences. But with BI Insurance, you can cover these risks and mitigate their potential financial impact, giving your business the support it needs to get back up on its feet.
What is Business Interruption Insurance?
What does Business Interruption Insurance cover?
Business Interruption Insurance covers events that damage your business premises or equipment, such as fire, floods or storms. They can also cover you if one of your suppliers or a neighbouring business suffers physical damage that disrupts your ability to trade.
To financially support you, the insurance can help you to pay for things such as a temporary move to a new location, operating costs, taxes and loan repayments. It will also reimburse you for the loss of profits and income.
Frequently Asked Questions
Unlike Employers’ Liability Insurance, there is no legal obligation to arrange BI Insurance for your business.
However, if you operate from physical premises, such as a shop, restaurant, factory or warehouse, your business could lose significant income if you are forced to stop working.
Deciding whether to get Business Interruption Insurance is therefore dependent on the perceived risks to your business and their potential financial impact.
To help you decide whether it is something you need, take a look at this example.
Business Interruption Claim Example
You run a printing business producing materials for local and national clients.
An accidental fire breaks out overnight, destroying your machinery and some of the stock stored in the warehouse next door. The building is subsequently declared to be unsafe and you and your staff are denied access to it.
Financial implications include:
- The loss of income from unfulfilled printing orders and the subsequent loss of contracts.
- The need to pay staff to retain their skills for when your business is back on its feet.
- The cost of temporarily relocating your business to a new base.
- The cost of retraining your staff to use new printing machinery.
- Needing to keep up with tax and loan repayments despite income and profits being affected.
In this case, because your business premises was physically damaged by an insured event, Business Interruption Insurance can step in to cover the loss of profits and income. It will also help you to pay staff, the rent of a temporary new location, and keep up with other financial commitments.
It depends on the Business Interruption policy, but common exclusions include intentional damage by the business owner or the impact of economic downturns. Pandemics may also be excluded unless otherwise stated in your policy wording.
To file a claim, you need to provide financial statements, tax returns, payroll records and other documents to verify business income before the interruption. Documents relating to the event causing the business disruption, such as a police report, might also be required.
The cost of your Business Interruption Insurance will depend on the risks your business faces and the potential impact these could have on your income and your business’ ability to trade.
To find out more, talk to our team.
