Who needs business interruption insurance? Unfortunately quite a number of businessman do not reflect on this question long enough. Business interruption insurance is usually the last thing on a business owners mind when he comes up with a business plan and is generally the first thing he regrets not purchasing when his business is affected by some sort of interruption or another. There should always be an allocation for business interruption coverage or any form of business insurance for that matter. It can even be included in a business property insurance policy as an added coverage but it is not a standard feature.

Some business owners are under the impression that they should only get business interruption insurance if their business is located in a disaster prone area or is at a higher risk of being disrupted. But this type of insurance could also cover losses sustained due to power outages and utility breakdowns.

If a disaster or any other form of disruption should come about and have a negative impact on your business, your business will cease too operate and create revenue but instead incur fixed cost which would include rent and utilities. This is where business interruption policy will will save the day.

Business interruption insurance coverage normally covers the opportunity costs during the period your business premise is rendered unusable. This figure is determined by your past financial records based on income earned during a comparable period. When applying for coverage, businesses must record previous revenue with monthly income and expense records.

The insurance also covers the costs and expenses incurred by your business even though the place is unusable. Just as before, these fixed costs are determined by analysis of historical financial declarations.

Business owners should also seriously consider an extra expense coverage. This is the expense that might be incurred by keeping the business open. Extra expense coverage is offered by insurers to lower business interruption costs. For example, if your business can stay open by merely renting a piece of equipment, then the extra expense of the rental would be covered as the insurer would be more than happy to pay the extra expense of the rental than the cost of a shut down.

Business interruption insurance is quite possibly the most valuable insurance coverage your business can posses. It should never be neglected. It is a definite necessity which can offer some peace of mind just like business travel coverage. You should never take it for granted that your property insurance will insure everything. Have it checked and be sure it consists of the coverage your business requires. As the old saying goes, “Its better to be safe than sorry.”

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