Terminology Tuesday – Business Interruption Coverage

You may have seen this term listed on your property policy, but what does it really do for you? Similar to loss of use coverage on a homeowners policy, this type of coverage will help you out with the expenses accrued when your business must close due to a claim.

Most likely, you’re thinking this might be of help during this whole Corona Virus pandemic; unfortunately, almost all business interruption coverage forms exclude epidemics or pandemics. However, if there is a riot in your city and your property sustains physical damage as a result that causes you to have to shut down the business, the coverage would apply.

Business interruption coverage is going to help you cover the following in the event of a covered loss:

  • Lost revenue you would normally make if business was open
  • Mortgage, rent, and lease payments for the space in which your business is located
  • Loan payments you need to make while your business is closed
  • Taxes (whether paid monthly or quarterly)
  • Employee payroll
  • Relocation costs (if you have to move to a new or temporary location)

However, business interruption coverage does also have some exclusions:

  • Broken items resulting from a covered event (these will be covered elsewhere on your property policy)
  • Flood or earthquake damage (there are special, separate policies for these two perils)
  • Undocumented income
  • Utilities (these are usually turned off when the business is closed down anyway)

If you have questions about how much coverage you need and what type is right for you, please let us know!

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