What is Business Interruption Insurance?
Business Interruption Insurance or Business Income Insurance is a coverage that can be added to your General Liability or Business Owner's Policy. But what does it do? Business Interruption helps keep income coming to businesses who have to delay or stop their business operations due to a covered claim. The last part there is the important part. Typically this coverage will only be triggered by a covered claim. The most common type of trigger is a claim to the office space. Depending on the type of company you may not be able to operate at all if the office space is unusable. If the office is no longer usable operations halt or in other words business is interrupted. This triggers the coverage and the insurance company will step in.
This can be a huge saving grace to businesses that run on smaller margins and can't afford to go without operating for an extended period of time. If the office space was a total loss and was unusable, how long would it take to get completely rebuilt? Would your business be able to recoup all of that lost earnings? would you still be able to pay employee's? Would you be able to retain your current clients?
Some of the great things that Business Interruption Coverage can do is cover operating expenses to move to a temporary location, cover payroll, taxes, loan payments.
For any kind of office based business we recommend this coverage as a must.
Will Business Interruption pay out because of the Covid-19 Pandemic?
Currently right now we have Covid -19 causing interruptions with business across the country, but is that covered? Whether or not this coverage will cover these losses due to the Government forcing shutdowns is a huge national debate. Many states are taking initiative to introduce legislation that would require Insurance Carriers to pay out this coverage during this time. There are many different schools of thought in regards to how the Insurance Companies should handle this. On one hand this stop of business could have catastrophic effects on small businesses across the country. Many may not be in business without some kind of assistance once things are back to normal. On the other hand, If not caused by a covered loss, Business Interruption was not designed to be triggered. So it was never designed to be a coverage to cover Government forced shut downs. This means that it this kind of situation was not included in the pricing and rating of this coverage.
Would the regional and local Insurance Companies be able to survive this kind of mass claims filing if they did not include the risk in their pricing? Will they have any clients left if something does not keep the businesses struggling due to the shutdown afloat during this shutdown?
Here, in Ohio, House Bill 589 has been introduced to require Insurance Carriers to pay out Business Interruption claims resulting from the Covid-19 Pandemic but many companies warn that the coverage was never intended to cover this kind of event and it could hinder companies paying out covered losses as a result of normal situations.
This is a issue in front of many of us today and we are trying to navigate the waters and find a viable solution for all. As an Independent Insurance Agency we work with a lot of small and medium sized businesses and will be keeping a close eye on how this works out.
If you have questions on this coverage or want to see if your policy has this coverage, please give us a call! The phone number for Gilles Smith Purdum Insurance Agency is 614-878-0240
Written by:
TJ Gilles, CLCS
Sales Executive
GSP Insurance Agency