Business Owners Policies, or BOPs, are business insurance coverages that package several types of insurance into one place. These are usually the most-essential types of coverage that a small business could use. One of these usually is business interruption insurance. It's there to help you in the event you have to temporarily close the business. What costs will it pay for you?
When setting up your BOP, ask your Consolidated Insurance Markets agent if it will include business interruption coverage. In many cases it will. Take some time to familiarize yourself with this coverage.
Business Interruption Insurance
Following incidents in your business, you might not be able to make money. That could equal a big loss of money in addition to the damage costs you might already face.
Say, for example, that a fire damages your restaurant. The repairs will take time, but you expect to reopen. However, during that closure time, you can't make money.
Therefore, not only will you face a lot of unexpected costs related to the fire, but you might also not be able to make the money to cover some of these. As a result, you could face a significant loss of income just trying to afford your recovery.
If you have business interruption insurance, it is this coverage that can help you recoup such lost funds. Because your operations have been interrupted, coverage will help you recover some of the lost income and pay ongoing bills that might beckon during the closure.
What Your Business Interruption Coverage Can Pay
Business interruption coverage can help you pay for a variety of costs related to the temporary stoppage of work. Three of the most-common costs it can cover are:
- Lost Income: This is the money you would have made had you been able to stay open.
- Standard Operating Expenses: Employee salaries, utility costs, and other bills that won't stop during the repairs can have coverage under this protection. Therefore, you can reopen in the state you were before the closure.
- Temporary Space Coverage: If you have to move the business (temporarily) during the closure, then business interruption coverage can help pay your expenses. It might also cover the rent in the new space.
If you have other types of coverage, such as equipment breakdown insurance, those policies might also pay for some degree of lost income. For example, if a piece of machinery breaks down, then coverage might help you cover income lost during the failure.
Keep in mind, some policies don't pay the full lost income related to the operation. For example, you might have to remain closed for a certain number of days for the coverage to kick in. But in many cases, once coverage starts, it can remain in place until you reopen.