Business interruption insurance protects businesses by replacing income lost in the event of an unfortunate disaster. This insurance isn't sold as a stand-alone policy but as rider/endorsement to property/casualty insurance.
The ongoing pandemic has put a pause on several business-related operations. However, the question remains: Will business interruption
insurance cover your business's pandemic-related losses?
Business Interruption Insurance: What's Covered?
Business interruption insurance policies ensure that an enterprise isn't kicked out of the market in case it needs to close down temporarily. The policy will provide income replacement to help finance daily operating expenses and overhead costs until work resumes. Statistics have shown that only 30 - 40% of companies carry some form of business interruption coverage. Businesses, especially SMEs, should carry this insurance to protect themselves in the event of interruptions
A typical business interruption insurance should cover property damage, liability claims, and lost business income. While the covered perils may differ as per the terms of each policy, a standard
business interruption insurance policy should cover damages caused by fire, bad weather, or theft.
Will Business Interruption Insurance Cover COVID-19 Losses?
The ongoing COVID-19 pandemic has dealt a huge blow to the global economy. A
statistical report shows that more than 160,000 businesses were forced to close down as of August 2020. Approximately 60% had little to no hope of reopening.
Although a typical business interruption insurance policy does not include losses caused by a pandemic, if the terms of the agreement specifically mention it, such an event will be covered. If your enterprise was among those that closed down during the pandemic, it is best to contact your insurer to know whether your policy covers your pandemic-induced business losses.
Managing Pandemic-Related Losses Due to Business Interruption
Contact your insurer to know if your policy covers losses for business interruption caused by a pandemic. Even if it isn't expressly stated in the agreement, there are a few things you can do to manage pandemic-related losses, such as:
- Restructure your business operations to include ways in which you can continue to offer services while observing social distancing norms.
- Review your business budget to cut down on unnecessary expenses. You can consider a temporary salary reduction for all workers to minimize operating costs.
- Keep up with the latest developments of the state and federal legislature that aim to support businesses suffering from pandemic-related losses.
- Keep a clear record of all losses incurred during the pandemic for the time when you may have to present documentary evidence. The record can show property damage, liability claims, or a loss of income.
- Consider taking out loans to keep your business afloat until everything normalizes and work can fully resume.
The Bottom Line
Business interruption insurance is a type of coverage that all businesses, especially SMEs, should consider to stay protected against emergencies. Although it isn't certain to cover pandemic-related losses, it can help cover other losses caused by an unexpected interruption in work activities. Do not settle on the first coverage plan you come across, rather compare different offers and settle on the best rate for your specific situation.
When looking for
business insurance in Banning, Beaumont, and more, we are here to help. Let the professionals take care of your insurance needs. Little & Sons Insurance Services has been providing California residents with customized insurance services since 1922.
Contact us today for reliable
business insurance.
