What Should I Look For When I’m Buying BI Policy

What Is Business Interruption Insurance?

In simpler terms, business interruption insurance provides your business with coverage in the event that you are left unable to trade following a catastrophe at your business premises.

Business interruption will cover you for loss or earnings or profit, it is often overlooked but is generally one of the most important pieces of cover to keep a business afloat. 

You can always make changes and customise the policy according to your needs, or let professional brokers, such as at Forum Insurance, do the job for you. 



What It Covers

Most of the business interruption insurances cover the following:

• Profits: Losing profits is one of the worst issues for a business. Business interruption insurance provides reimbursement for the profits (usually gross profit) that you could have earned if the unforeseen event did not occur.
• Temporary location: For instance, your place of work gets destroyed or completely unusable. The policy might cover the costs of you moving and operating at a temporary site, depending on the terms.
• Employee wages: It might also help the owner make payroll while the business is not in a healthy operating condition to avoid any loss of employees.

Things You Should Keep In Mind

As the owner of the business, you need to take some reasonable steps to ensure your livelihood if the unexpected happens to your business. A business interruption insurance would be the perfect coverage for such scenarios. Here are three things that you need to keep in mind when buying a business interruption insurance.

What If The Worst Happens?

You never know when things go south. So, you always need to prepare for the worst. The first thing that you need to ask yourself is whether or not you would be able to survive if something unfortunate happens. For example, if your business premises burned down; whilst waiting for it to be rebuilt, you are unable to trade and lose some vital contracts. Due to poor cash flow, you have to let staff go. 12 months later, you’re ready to start trading again, your old staff have new jobs, so you need to hire new staff and train them, at a cost. Your old clients have signed contracts with competitors because they still needed goods and services provided by you previously. Business interruption will cover you even for the reduction in earnings until you are back to the position prior to your disaster.

These are some questions you need to ask yourself to decide whether you need to get a business interruption insurance or not. Generally, it is nearly impossible to sustain a business in such circumstances, especially if it is a startup or a small business.

What Should Be The Time Period For The Insurance Coverage

Most people go for an indemnity period of about 12 months for a business interruption insurance. However, most businesses often require much more depending on the terms of the insurance. What you need to consider is what would be adequate time for you to bring your business back on its feet if the worst happens. For instance, fire damages the working area and makes it impossible for you to work. The insurance company would provide you with coverage for a year. What you need to ask yourself is that would that time be enough? It would help if you created hypothetical scenarios and estimated the time to replace stock, rebuild facilities, repair/replace machinery, but even more importantly, how long until I was enjoying the position I was prior to my loss? Don’t assume you’ll be back trading just as you where after 12 months, it can often take much longer even when you get back to full capacity. 

Do You Have Enough Cover

Lastly, you need to consider how much coverage you need for your business. You need the right amount of coverage to protect your business from falling apart. Think about all the costs, including fixed and overheads, to tailor the perfect policy for your business.

What To Do

Now that you already know how vital a business interruption insurance can be for your business make sure you take reasonable steps before you accept the coverage. Read the policies and understand what is best for your business. Also, if you are unsure or indecisive, you can hire Forum Insurance, which is a renowned brokerage, to help you out! We will offer you expert advice and professional consultancy to ensure you get the best possible product for your needs.