In order for your business to be profitable, there can be nothing that disrupts your ability to serve customers. However, when you own a business, you need to be aware that weather, vandalism or some other incident could lead to the inability to continue business for a specific time period. Many business owners assume that a typical property damage policy will be sufficient in covering losses, but this policy will only cover costs of repairs. This means that all profits that you lose due to temporary interruption are not covered. When you are losing your stream of profits, you still must pay for rent, utilities and other expenses that are associated with your business. This means that business interruption insurance is the perfect solution. There are 3 basic elements of business interruption insurance that you need to understand before you choose a policy of this type.
Business income involves the net income that you would have earned if your business was not interrupted for any period of time. The figure that is used to determine the amount of business income that you could potentially be open to is derived by looking at past financial reports. This can also be used to determined the amount of business interruption insurance that you would likely require, depending on the duration of the interruption. If your business must deal with an unexpected interruption caused by tornado damage to your building, you would be able to be paid for the profits that you lost out on during the 3 weeks that it takes for all repairs to be completed if you have interruption insurance. This means that you would still have an income stream no matter what type of interruption takes pace.
This is another element of business interruption insurance that involves all normal profits that a rental property owner would receive from tenants if normal operations occur. This means that even charges that normally go to tenants will also be covered under this type of business insurance.
This is the last element of most business interruption insurance policies. This is the type of coverage that will ensure that you are paid for all extra expenses that are associated with temporary interruption of your business. This includes expenses like rental equipment, cost of rent or other fees that you are forced to pay when your property is temporarily not useable. This allows you to have peace of mind knowing that all expenses related to your normal operations being delayed will be covered in full at no out of pocket cost to you.