What Is Business Interruption Insurance?
Imagine you own a thriving business. Suddenly, an unforeseen disaster such as a fire or flood happens and brings your operations to a halt. Your revenue takes a significant hit. How do you continue to meet your financial obligations like salaries, rent or loan repayments? This is where Business Interruption Insurance comes into play.
Simply put, Business Interruption Insurance is a type of insurance that helps to cover lost income and operating expenses if your business is disrupted due to unforeseen circumstances such as natural disasters or other calamities. Its primary aim is to get your business back to the financial position it would have been in had the interruption not occurred. In other words, it helps you recover, rebuild and keep your business afloat during challenging times.
Speak to one of AIB’s expert business insurance brokers today to find cover that is suited to your business needs.
Who Should Consider It?
If you run any kind of business that could be impacted by an insurable catastrophic event such as fire, flood, storm damage or other natural disaster, then including Business Interruption Insurance in your cover should be a priority. Small and medium businesses and those in the retail sector are particularly vulnerable to major disruption.
For most business owners, there are ongoing expenses that you need to pay even if you’re not generating any revenue – like staff wages, supplier invoices, rent or loan repayments.
Business Interruption Insurance can get you through a temporary crisis by protecting your cash flow – so you can pay these expenses and help ensure the future of your business.
What It Can Cover
Business Interruption Insurance can cover the loss of any sales you would have made while your business is out of action – plus any extra costs you incur to stay open. AIB can help you find the right level of cover for your needs. Depending upon the policy, Business Interruption Insurance can cover:
Loss of Revenue/income
This includes Income that would have been earned during the period the business cannot operate.
Fixed costs
Operating expenses and other costs still being incurred by the property (based on historical costs) such as wages, rent, supplier charges.
Temporary Relocation
The extra expenses for moving to, and operating from, a temporary location.
Recovery Costs
Reimbursement for reasonable expenses (beyond the fixed costs) that allow the business to continue operating while the property is being repaired.
Civil authority ingress/egress
Government-mandated closure of business premises that directly causes loss of revenue such as street closures.
Exclusions, the excess you need to pay and limits of liability can vary greatly depending on your insurer. AIB can help you find a policy that suits your needs.
How Can Business Interruption Insurance Protect You?
Case Study
Linda is the owner of a small office supplies business – with eight staff on the payroll and numerous suppliers.
Late one night, the restaurant next door catches fire and it spreads to her business premises – destroying the property along with the stock and IT systems. She’s unable to open the shop for weeks while the building is being repaired. Because the business isn’t operating, she’s not making any money – meanwhile the bills are piling up.
But with Business Interruption Insurance, Linda banks an insurance payment – maintaining her cash flow at pre- interruption level. Linda can continue paying her staff their regular wages, so they keep their jobs, and rents a temporary location so the store can keep running.
