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Business Interruption Insurance: How Does It Work?

15 Aug 2019, Posted by RRBHLAWZENblog in Insurance Litigation
business interruption insurance

Business owners do a lot for our community in Miami. They create jobs and offer essential goods and services. But sometimes business owners need support. In case of disaster, business interruption insurance gives business owners the security they need to continue to do business, to cover their lost income, or both.

Let’s look at an example: say a bad storm took the roof off the building where your business is located. Not only is the building now unsuitable for business, but also your merchandise is ruined. Here’s how this scenario might play out if you have business interruption coverage.

How Does Business Interruption Insurance Work?

In the above example, you would need to replace the value of your merchandise and possibly find a new place to run your business until the building is repaired. With business interruption insurance, both might be covered:

  • Lost income – Business interruption coverage will reimburse you for your damaged merchandise. In addition to replacing the value of your goods, business interruption insurance may also cover the business that you lose because of the damage to your property, for instance, if you have to close for several days or weeks. Insurers will use your financial statements to determine the amount you are entitled to, so it is important to keep those documents in a secure place.
  • Extra expenses – You may also be entitled to coverage if you need to temporarily move your business to a new location to continue operations.

Remember that if you want to make a business interruption insurance claim, you have to present evidence that you suffered losses while your business was in operation. Many policies also have stipulations that limit the amount you can recover and how long your coverage lasts, so make sure that you study your policy in case you need to increase your coverage.

How Much Coverage Is Enough?

Which brings us to the next point: how much coverage should you have to protect your business? After all, any losses that you endure beyond your coverage limits are your responsibility. While we cannot answer definitively what your situation requires, we can give you a few tips to help you choose the right amount of coverage:

  • Think about how long it would take you to get your business back up and running after a disaster – Outline how much work would be required if you had to pick up and move to a new location in case your current location becomes unsuitable for business. This should help you determine the length of time that your coverage should last.
  • Think of the options you have for renting a new space – It takes time to move your business, but it also takes time to find a new location. Sometimes you might not find a space for weeks.
  • Take into account how long it would take to restore your business after a disaster – Some restoration can take months to complete. You don’t want to be on the hook for renting your new location during that time.

You should also consider the value of any merchandise that you have on the premises.

Need Help Getting Reimbursed from Your Business Interruption Insurance?

If you have filed a claim for business interruption coverage but the insurance company denied or underpaid your claim, get in touch with us today. We will work with you to get you the compensation you are entitled to.

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