If you own a popular business, your clients rely on you to stay open no matter what happens. Business interruption protects your business when you lose profits due to a natural disaster.

Here’s more about this type of coverage — and how it can save your business.

How Business Interruption Insurance Works

You likely know how your business insurance covers you for lost revenue due to earthquakes, flooding, or tornadoes. In order to get interruption coverage, you must have property and fire insurance for your business. Interruption insurance reimburses you for earnings lost due to an underlying covered event.

Interruption Coverage as Part of Your Survival Plan

Could you keep up with orders if your equipment failed? What if you have to close your doors due to a natural disaster or another event? You would lose money, but all your overhead charges and labor costs would continue.

Including interruption in your business insurance policy can help your business survive during adversity. Work with your agent to calculate your coverage needs. The following types of businesses might benefit from interruption insurance:

• Companies with physical assets required to run the business
• Retail, catering, wholesale, and manufacturing firms
• Businesses located in areas prone to frequent flooding or other risks
• Businesses with machinery or equipment requiring customized parts

What Business Interruption Insurance Covers

Business interruption policies typically address your specific business needs. This includes operations and turnover. Consider the following when making decisions about your coverage:

• Profit: You receive funds that replace lost profits you would have achieved while you had to close. This amount comes from the profits from previous months and forecasted trends.
• Temporary Relocation: While your business undergoes repairs, you may have to move to a new location. Your business insurance covers the costs of moving and operating at a temporary location.
• Fixed Operational Expenses: Based on your records, your business interruption insurance covers your operating costs, such as wages, utilities, and other ongoing costs.
• Fines And Penalties: This coverage reimburses you for fines and penalties for breach of contract in case you can't fulfill a business commitment.
• Increases In The Cost Of Working: This is additional coverage for reasonable expenses incurred while your commercial property is repaired.

What's Not Covered

Business interruption doesn't protect your business from:

• Damages due to political unrest such as strikes, riots, and terrorism
• Liability or liability claims (such as cyber attacks)
• Economic slowdowns

Ask your insurance agent about whether you should add interruption coverage to your business insurance policy.