Business Interruption Insurance

Life Support For Your Company

September 11, 2010

On September 11, 2001, Americans suffered one of the most horrific tragedies our country has ever experienced. Many suffered untold personal loss and many small businesses in the surrounding area simply could not withstand the financial disaster that followed. Too many, closed their doors and went out of business. "Yes, most of them had property insurance, but what they lacked was a way to cover the loss of income while their businesses where being cleaned up and rebuilt," says Frank N. Darras, the nation's top insurance attorney. "They lacked the life support that Business Interruption Insurance can provide."

While not all property losses are the result of such major catastrophic events, statistics show that the majority of all businesses suffer some loss of income due to interruption of their daily business. Take a look:

  • 72% have had operations significantly interrupted for power outages
  • 52% because of computer hardware problems
  • 46% because of telecommunications failure
  • 43% because of software problems
  • 34% because of lightning storms

Business Interruption Insurance is not a policy you buy separately. It is coverage you can add onto your existing property insurance or it could be part of your business owner's package policy. Its purpose is to protect business owners from losses that temporarily shut down or interrupt their normal daily business activities. It covers their loss of profits and helps with expenses. And the good thing is, this type of coverage can usually kick in after only 48 hours.

"Remember, your doors may be temporarily shut, but you creditors still want to get paid," says Darras. "Your source of income is lost but your expenses remain the same. Your business needs protection to keep it alive and healthy through a difficult period – life support for your business."

There are various types of business interruption coverage, so check with your agent to see which would be best for your particular company. One thing to consider is extra coverage that would help with the expenses of relocating temporarily if you need to, in order to resume operations sooner.