When most people think about insuring their business, the first thought that comes to mind is making sure their insurance policy covers their building and inventory. This is understandable—if a fire wipes out your entire shop, you want to make sure that you’re going to have a place to set up shop again. However, many do not think about the indirect losses that happen as the result of having to shut the business down temporarily. Covering lost income and paying for the operating expenses that continue to exist while you close or relocate the business is just as important as covering the building and contents. Business interruption coverage is a coverage specifically designed to cover a business for those indirect losses that hit you when you are forced to close up shop, whether for a short time or permanently.
Business Interruption Coverage
The biggest benefit of business interruption coverage is the provision for lost income while your business is closed. Having lost income covered is especially beneficial for small businesses for which missing out on even a couple of months’ worth of income can make or break them. Also, there are continuous expenses, such as utility bills, that don’t stop coming just because you aren’t able to open your doors to customers. Those bills cause additional costs even when there may be no revenue coming in. Depending on the specifics of your policy, business interruption coverage can step in and cover you for these losses.
Beyond lost income and operating expenses, there are additional indirect losses that can occur. Business interruption coverage is meant to cover costs that come up while attempting to keep your company running. You may have additional expenses for things such as: relocating to a new space, overtime pay for the extra hours that are needed, and other costs that come up as you work through alternate methods of doing business while your insurance company works to restore your building and business property.
In addition to business interruption coverage, another incredibly important coverage to consider is cyber insurance. Insurance has adapted in this age of technology and cyber losses, introducing a whole new level of risk and loss that you may never even have considered. Hacking and digital information theft is rampant. It seems as though there is story after story on the news of hackers getting access to customers’ financial information through businesses' computer systems. The theft of your and your clients' information not only puts your company in a tight financial spot, but also causes a loss of reputation. Customers are less likely to put their trust in a company that treated their information without the proper security. Cyber insurance can cover you for those losses and help restore your customers’ faith in your stability.
Running a business is no easy feat, no matter what the size. Insurance may seem like just another thing to check off a to-do list, but by protecting your business, you are protecting your investment and your future. If your business does suffer a loss and you need to make a claim, ensure that you have all the coverage needed to get on your feet again and to restore you to the same financial place you were before. If you are concerned that your business may not have the right coverage to protect against those types of losses, make sure to contact your agent to review your policy.
For more information about potential unexpected costs and coverages for your business, contact Skyline Risk Management, Inc. (718) 267-6600 to voice your concerns.