MC Magazine

Business Interruption Insurance

One way to ensure that your firm gets back up on its feet quickly after a fire, hurricane, earthquake or other event that affects its operations is with business interruption insurance. Also known as “business continuation” coverage, it provides for disaster-related expenses that may be incurred until your operations are fully recovered.

Bill Miele, vice president at Seattle-based Safeco Risk Services, a provider of business insurance to small and midsize U.S. companies, says this particular coverage is often overlooked yet very important, because while the typical precaster can probably withstand the disaster itself, it would probably buckle under the loss of business it experiences as a result. In fact, the post-disaster closure rate of companies is about 51 percent, according to Safeco.

Business interruption coverage, which is available through your property and casualty provider, pays for critical needs like payroll and operating expenses on its own, and for post-disaster needs like emergency production equipment and lease fees for temporary space through its “extra expense” option.

Many office policies and Business Owner Policies (BOPs) include some level of business interruption coverage at little or no extra cost. The coverage is typically available in three-month, six-month or one-year increments, and its cost depends on the nature of the business and the length of coverage desired.

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