If recent years have taught business owners anything, it’s that the stability of one’s business can change in a matter of weeks. Without the right protection, months of marketing, product construction and staff training can suddenly become all for nought.
It’s with this in mind that many companies are upgrading their business interruption insurance policies to ensure that they are covered for just about every eventuality. Whether your business experiences a natural disaster, unexpected closure or even forced relocation, you’ll want to be prepared.
Business interruption Insurance is a Must-Have
Being underinsured is the number one reason why many small to medium businesses don’t survive a disastrous incident. To avoid this, experts recommend investing in business interruption insurance to help your company survive everything from being affected by bushfires to being forced to close during a pandemic. What does business interruption insurance cover and how will your company benefit from having it? Let’s find out.
Covers Potential Rental or Mortgage Costs
No matter what type of business you’re running, chances are the premises you’re using require rental or mortgage payments to be made every month. Unfortunately, a natural disaster or pandemic doesn’t make you exempt from your financial responsibilities.
Business interruption insurance will ensure that your rent or mortgage payments will still get paid. This will prevent you from losing your business, getting evicted or defaulting on your mortgage payments.
Helps You Deal With Overhead Expenses
Overhead expenses such as utilities and data communication are among the top expenses that each company may have. Investing in an extensive business interruption cover will ensure that these costs are also covered. This will make it easier to ensure that your business can easily return to normal as soon as the emergency has been dealt with.
In addition to regular overhead payments, many companies will also have business loans to contend with at some point or another. Most banking agreements won’t have a clause to cover events where the business can’t trade. Business interruption insurance will be the ideal way to cover these expenses and avoid the negative results of missed payments of these magnitudes.
Sustains Employee Wages
It goes without saying that a closed business will have an overwhelming effect on your employees. Whether you have one or twenty employees, your staff will be left wondering how a closed business affects their regular income. Not being able to trade normally also puts a lot of pressure on business owners to meet regular payroll deadlines and sustain employee relationships.
This may lead to employees leaving and ultimately you will have to recruit and train a new team when your business opens again. This can be challenging, time-consuming and costly. Fortunately, business interruption insurance will cover your employees’ salaries as well.
Covers Potential Sales Revenue
Every business relies on sales or service revenue as its primary source of business. If this income can’t be generated consistently, other expenses can’t be covered. Events such as fire, floods or other natural disasters can make trade impossible if your commercial property has been damaged.
Business interruption insurance covers the estimated amount of income that your company would have generated over a specific period. This then means that you can pay expenses such as utilities and scheduled vendor payments.
Covers Potential Relocation
Some disasters may leave you unable to trade in your commercial building. This can be permanent or temporary while the premises are repaired or restored. While relocation may seem like a simple solution, it can be a very costly process and usually requires months of advanced budgeting and planning.
A sudden relocation on top of unexpected business closures can be too costly for some businesses to handle. With business interruption insurance these relocation costs will be covered. This generally includes the deposit for the new premises as well as the actual moving and marketing costs to establish the business in a new space.
Extensive Range of Events Covered
A huge plus of business interruption insurance is that it covers several different potential events. Keep in mind that your type of coverage determines the number and severity of the events covered. The most common of these are:
- Water or fire damage to the building or the stock on the premises.
- Natural disasters such as tornados, earthquakes and hurricanes that make it impossible to trade.
- Cyber incidents that can compromise your business’s regular operating procedures.
- Vandalism or crime to your property or hardware systems.
- Machinery breakdowns that compromise the regular flow of business.
- Failures from your suppliers or vendors to supply original products or components.
Final Thoughts
An unfortunate event beyond your control doesn’t have to be the reason your business doesn’t survive a natural disaster or an act of vandalism. Investing in the relevant business insurance interruption policy will ensure that your company and your employees are protected against whatever external challenge the universe throws your way. Be proactive and make 2024 the year that you upgrade your insurance policy!
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