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Understanding Business Interruption Insurance & Why You Need It

If you own or run a business, you already know how important it is to have property insurance — especially liability insurance. But what do you do if a property insurance claim forces your business to close temporarily? Revenue drops to zero. But your business hasn’t totally shut down: payroll still has to be paid, your rent or commercial mortgage is still due on the first of the month and utility bills and loan statements keep rolling in. Seasonal slowdowns are one thing, but when your revenue stops unexpectedly, everything you have worked to build may be at risk.

Fortunately, you can purchase business interruption insurance! This coverage pairs with your business property insurance or business owners’ policy to provide a lifeline when revenues are affected by a claim. Your coverage can replace the revenue you will need to protect the future of your business. But you might be thinking — what are the odds of this happening to my business? 

Well, here is a real-life example.

Let’s say you own a new phone store. At the store, business is growing, and you are carving out a niche for yourself in the local market. You are located on a busy road — visibility is great, and demand is high. There is every reason to be optimistic about the future. One day, a car veers off the road (ironically, they may have been on their phone). The vehicle crashes through the front of your store, breaking the window, door, showcases and damaging a wall. Fortunately, nobody is seriously hurt. And thank goodness you have property insurance to cover the repairs and damage to the showroom.
However, you might still be closed for a while because of the wall. Basic repairs can be completed in days, but in this case, the process might take weeks — or even months. In this real-life example, the wall is a load-bearing wall. The engineers from the township have to schedule a seemingly endless array of meetings, surveys and inspections. You are out of business until the township says the building is safe. Even your neighbouring businesses are affected.

When you started your business, you wrote up a business plan. In your plan, you detailed your business goals, expected revenues, expenses and other factors. If you were thorough, you also detailed the challenges your business will face and how to overcome these challenges. Business interruption insurance covers the risks that are impossible to predict — risks not addressed in your business plan, but ones that happen to real businesses every day! It’s important to expect the unexpected.

Reach out to your agent or broker to learn more!

There are a variety of factors to consider so your home is properly insured. The team at Access Insurance is here to walk you through your homeowner’s policy and help you secure ultimate insurance protection for your personalized risks—ensuring full coverage in the event of a claim.