What is business interruption insurance?

Business Interruption Insurance explained here. It covers your firm against the many bumps on the rocky road to success.

This is insurance against the random acts of man and nature.

Business Interruption Insurance explained – Part 1

  • It’s a form of insurance that covers your loss of income when a claimable event occurs.
  • The plan covers loss of stock and equipment.
  • Insures you for the loss of income suffered.
  • Helps you to pay your fixed expenses when your business is not running.
  • Covers certain costs related to carrying on business from a temporary base. Re-locating, even for a short while, is expensive.

Business Interruption Insurance explained – Part 2

This type of cover helps tide you over when a claimable event makes it impossible for you to carry on trading. This can result in huge losses.

What if your Telkom line goes down for two or three weeks due to stolen cables. You also need cover for natural disasters which no one can foresee.

Business Interruption Insurance explained – What Is A Claimable Event?

  • Theft of stock and equipment
  • Accidents involving your trucks carrying goods.
  • Goods in transit damaged.
  • A breakdown of machinery. If, for example, you are a mechanic and your hoist breaks down. You cannot trade.
  • Subsidence on your property may make it unsafe to access the area.

What are Payouts based On?

  • The pay out takes into account what your actual fixed expenses are, such as rent, wages, etc.
  • The loss of profits you would have made from normal operations.
  • The temporary hire of machinery or premises.
  • Losses that arise from no telephone service.
  • Loss of income due to a public supply being interrupted. Such as municipal workers on strike, or the electricity supply is down for a period of time.
  • If you are unable to access your business premises due to strikers or protestors blocking off roads.

Business Interruption Insurance explained –

Interruption insurance goes a step further than a standard insurance. Standard cover pays out if goods or equipment are lost or stolen. While this helps, it does not go far enough to make up for the loss.

You also need to make up for the loss of the opportunity to make a profit. Getting replacement goods or equipment takes time and you need something to fill in the income in the interim.