Understanding Your Business Interruption Insurance
Business interruption insurance is probably one of the most valuable insurance coverages a business can secure. Also known as “business income insurance”, this type of property and casualty insurance covers income losses due to a disaster. It’s slightly different than “time element” coverage. Time element coverage refers to insurance coverages that are tied to a period of time. It’s called “time element” because the amount of loss depends on how long it takes to repair or replace the damaged property.
Here are some examples of the two used together to help you understand how they are related:
- While a building destroyed by fire represents a direct loss, the lost income resulting from the shutdown of a manufacturing facility housed in the burned building represents an indirect “time element” loss. This loss would be covered by business interruption insurance, which is a form of time element insurance.
- Following a thunderstorm, your ice cream shop loses electricity for a sustained period of time. During this time, the backdoor alarm is not secure and someone enters and spray paints the walls inside of your business and eats all your mint chocolate chip ice cream. Once again, improving your business income policy – will further protect your business from property damage.
- If your primary business operations rely upon computer systems, a disaster that cripples your ability to transmit data could cause you, or a third party that depends on your services, to lose revenue. Once again, time element coverage such as business interruption insurance would protect your business from this type of loss.
When it comes to business interruption insurance and time element coverage, it is important to work with your trusted broker to identify areas of risk so your policy can be tailored to fit your unique situation.
Contact us below to have a KMRD property and casualty insurance expert help you with business interruption insurance.