Businesses Interruption Cover
We look at how business interruption cover can help small businesses
Everyone has those days where the universe conspires to stop them from getting anything meaningful done. If you run a business, you will be aware that it can also conspire to stop you trading for huge swathes of time. Indeed, most small business owners have found themselves lying in bed trying to get to sleep, worrying about turning up to work in the morning, only to find everything they’ve worked hard for destroyed, underwater or mysteriously disappeared in some way.
When you can and cannot operate is not always under your control and through natural and man-made disasters, you could find your usual trading activities put on hold. Business insurance policies can however mitigate this and tide you over in the event of a serious disaster with business interruption cover.
Business interruption replaces income lost whilst taken out of action and forms an excellent foundation to your business continuity plans. Let’s have a look at some of the more common things that can stop your business in its tracks and the sorts of things that can and can’t be covered.
What can be covered with business interruption cover
Fire damage in your business
Despite the modern times that we live in, fires can still completely and utterly gut a building. It is easy to dismiss fire as more of a historical threat now that our buildings are no longer made out of highly flammable wood and thatched roofs, but the truth is that things haven’t changed all that much. It is still a frightening force of nature that is one of the most common causes of long term business interruption.
As an example, with pub and restaurant policies, our in-house team recommend a minimum of two or three years business interruption cover in the event of fire if you’re taking out a policy. Rebuilding a pub can easily take at least that long due to their size and if the building is in the middle of a hard-to-reach town centre it makes it difficult to transport building materials to the site. To further exasperate matters, a huge number of pubs are also listed buildings which require extra regulatory boxes to be ticked.
Although less devastating than fire and much less likely to require a complete rebuild (unless you are particularly unlucky and become the lost business of Atlantis) flood damage can still knock you out for a significant period of time and can cause a huge amount of long-lasting business interruption.
Even on a small scale, if your premises are under just an inch of water, you will have to close up shop until it’s resolved.
Damage affecting a supplier
Sometimes your business operations are completely at the mercy of a third party. All the things that can affect your business can after all also affect any other business, including the ones you work closely with and rely on.
Even though the disaster hasn’t affected your office or anything you own directly, so long as a supplier is hit with something that would be insured by your business interruption cover, you can still claim for any affect it might have had on your ability to continue trading.
What is generally not covered with business interruption cover
Multiple Types of Damage
If you are hit by several different types of damage, if one of those contributing disasters is something that’s not covered by your policy, unfortunately none of it will be, regardless of how much damage each factor has caused.
If your workers go on strike, business interruption can’t cover this and you can probably imagine why. It would undermine the whole impact of industrial action and leave employers no incentive to negotiate with their workers.
Public Supply Failure
Any kind of utility that goes offline can take you out of business for quite some time depending on how serious it is. I’ve worked somewhere that was knocked offline for a couple of days by a national grid substation quietly exploding and when you rely on computers there’s no real way around that.
While accidental cut-offs would be covered, intentional disconnections resulting from you not paying your bills, or as a result of some kind of authority held by the utility company, would understandably not be covered.
Business interruption cover is a valuable addition to any policy, regardless of the size of your business. It is rare that a business owner can survive through a year or two without trading and those that can would still undoubtedly struggle. This cover could give you one less thing to stop you from sleeping at night.
Business Advice on Business Interruption Cover provided by small business specialist broker YOUR Insurance.