As a business owner, part of your responsibility is to protect the organization financially in case of an unfortunate event. Business insurance is thus an important risk management tool. One type of coverage reimburses you in case you must temporarily shut down operations. If you are unfamiliar with business interruption (BI) coverage, below are answers to questions you might have.

Questions About Business Interruption Coverage, Answered

What does it cover?

This type of coverage helps you pay for operating expenses, including loan payments, rent, taxes, and employee payroll. It helps you stay afloat after a covered disaster, such as a fire or storm, and during the rebuilding process afterward. It pays out an amount equal to the estimated lost net income, based on the company's financial records. You can normally claim expected profits, and sometimes the cost of a temporary operating location.

What does it exclude?

It does not cover undocumented income that is not listed on financial statements. It doesn't cover losses from natural disasters, including damage caused by earthquakes or floods. Therefore, you must buy a separate policy at an additional amount for natural disasters. 

Who needs it?

Most small or mid-sized businesses could benefit from this coverage. Without it, companies that rely on a physical location or equipment might have trouble recovering quickly from a destructive event. These include restaurants, retailers, hair salons, dog groomers, yoga studios, and other businesses.

How much do you need?

If losses exceed your business insurance limit, you'll have to pay out-of-pocket. You should have enough to cover expenses while you get back up and running. Consider how long it would take to recover and use your gross earnings projections for the expected length of time. 

If you seek high-quality business insurance, trust Consolidated Agency Inc. Based in Rochester, NY, and servicing the surrounding counties, they specialize in business, property, auto, and motorcycle insurance. Their agents are friendly, knowledgeable, and willing to answer questions you may have about business interruption coverage. Read client testimonials on their website, visit their Facebook, or call (585) 467-4110 to request a business insurance quote.