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Business interruptions: what are they and what can you do?
March 9, 2020
A business interruption is when you cannot continue running your company due to circumstances outside your control. Business owners across the United States have become intimately familiar with the subject of business interruptions. However, a business interruption does not need to be a global health crisis to become a threat to your livelihood.
Insurance coverage for extreme circumstances
According to Allstate, business interruptions of the normal variety typically include office damage from:
The list can go on and on, but it essentially comes down to some external force creating for you an inability to conduct “business as usual.
Coverage of this type reimburses you for:
Lost income: Obviously, not having your business open means vast cuts to your revenue stream. Your income has taken a hit and it might be some time before it recovers.
Increased costs: It seems unfair, but when you must temporarily close your business, that is when the costs can be the highest. To get your business back open you may have to move, temporarily or permanently. You may still have payroll costs.
Taxes: Even a damaged, inoperable business will have tax liabilities to cover.
Business interruption insurance, however, does contain some important to understand exceptions.
Exceptions to business interruption coverage
According to The Hartford, there are
some costs and issues typically
excluded from business interruption coverage. Some items, such as property damage and broken equipment, aren’t covered because they’d be included in a separate policy.
However, of notable concern is that there is usually no coverage for shutdowns created by communicable diseases. While the California Department Of Insurance notes that
some insurers now provide pandemic coverage
, it goes on to say, “cannot purchase buy fire insurance for a currently burning house.” Meaning, if you’re business was interrupted due to the health crisis this last year, it is now too late to buy business interruption insurance.
Preparation makes a difference
It is incumbent on you to look at all your insurance needs when opening or re-opening your business. To do anything less would leave you open to significant losses.