What Every Entrepreneur Needs to Know About Business Interruption Insurance

The COVID-19 calamity has caught everyone off guard and thrown people off the rails. It is not just the health crisis that one is concerned about right now. 

The global economy has never been worse than this. Organizations are changing their core values and trying to adapt to the changing circumstances in whichever ways possible, to stay afloat.

It is becoming exceedingly difficult for businesses to function during such grueling times. Now, the COVID-19 crisis is just one instance that we have cited as an example. 

There are several other possibilities of calamities that a business might suffer from. And what is needed at the time is decent coverage to protect the business from losses. 

One way to see to it that a business does not perish in the face of said challenges is by purchasing a Business Interruption Policy. 

However, the policy might come with a few exclusions if it is a pandemic that one is dealing with. Therefore, if you think that you can buy the insurance to be covered for the pandemic, you need to consider a few things. 

What Every Entrepreneur Needs to Know About Business Interruption Insurance

Business Interruption Insurance – In a Nutshell:

The Business Interruption Policy is a policy that covers a business’s losses due to its inactivity in the face of disasters. 

The calamities we are talking about could be fires, earthquakes, deluges, or even a pandemic of this sort. Most business organizations require a physical base to function. 

They cannot sustain themselves for a prolonged period of functioning from home. And even if they are able to do so, it is always beneficial to get this policy sooner than later.

The Features of the Policy

Here is a quick glance at the features that the Business Interruption Policy includes:

    • Covers the lost income due to doldrums in the business owing to various calamities.
    • Covers costs of operation, the cost of shifting base, loans, mortgages, and payrolls.
    • Could also cover the costs of loss of business if a civil body shuts a firm down due to physical damage to another business in proximity.
    • However, the Business Interruption Policy has a few exclusionary features for coverage during a pandemic.

More Details of the Business Interruption Policy:

We will look into some more significant details about the Business Interruption Policy to understand the topic in a better light. You could also look up some credible sources on the Internet to find more information. One must know that the coverage provided by the policy depends on the financial record of the business. 

If a business is seen to have performed well in the past, it might gain better coverage. However, if the business has suffered losses, the amount could be significantly less. 

The second thing to remember is that the policy will last until the period of interruption. However, you must also check what special clauses and features are mentioned in your policy. 

Different insurers have different clauses, so it is advisable that you run a quick check of the terms and conditions before purchasing the policy. 

Besides these pieces of information, it must be noted that there is a waiting period that usually lasts from 48 to 72 hours.

What is Covered Under the Policy?

We will now take a look at what the policy entails so that you can decide better for your business.


This is an interesting and primary feature of the policy. The policy takes into account the business’s performance in the months leading up to the crisis. 

Based on the performance, the policy reimburses the profits that the business would have earned had there been no event. 

This is the primary function of the policy and is enough of a reason for you to get it.

Fixed Costs and Temporary Costs

These are the two types of costs that the policy reimburses the business. The fixed costs are the operating costs included had the business operated under normal circumstances. 

The temporary costs are the costs that occur when moving from one location to another for the business. 

Training Costs

The third type of cost that is featured in this policy is the cost of training employees. Your Business Interruption Policy might be able to reimburse this amount. 

This is the cost that is required when companies have to train and retrain their employees.

Civil Authority Ingress or Egress

Here is another type of cost that the policy might cover. A business might suffer from incredible financial losses if a government mandate shuts down a business. 

In such a situation, it might be possible to claim the amount from the policy.

Taxes and Loan Payments

The policy also comes in handy to clear business taxes and pay off loans when it is suffering losses. The period of inactivity might result in the business to lose a lot of money. 

This is the reason why it is essential to have this policy that can cover for you at this time.

Employee Wages and Extra Expenses

The final and very important feature of the insurance is to cover for your employees’ wages and other extra expenses. Your employees will suffer the losses just as you are. 

So, they need their salaries credited to them on time. However, without insurance, you might not be able to pay the salaries and other expenses.

Summing Up:

Business Interruption Insurance can help you protect your savings and the interest of your business. It shall keep your business secured and afloat during challenging times. 

And that is the reason why every business, of any scale, must purchase the policy to stay prepared in the wake of a disaster or calamity. 

Contact the right insurance agent, do your research, and buy the policy that fits your bill. This policy is mandatory.

FG Editorial Team
The Founder's Guide Team - Asian Associates with dynamic elements out to make a change.Thank you for visiting our site! If you do have any questions or inquiry, feel free to contact us through our links and please don't forget to follow our social media accounts. It would be our pleasure to help you in any way we can. Always Remember: "Proceed to Succeed". Hoping to hear from you soon!