Business interruption - what it is and how to guard against it

Running a business comes with its fair share of uncertainties. No matter how carefully you plan, there is always the risk of unforeseen events disrupting operations and threatening your financial stability.

This is where business interruption insurance comes in to protect your business. Unlike general property insurance, which covers physical damage to a business premises or equipment, business interruption insurance focuses on the loss of income and the additional expenses incurred while your business is unable to operate normally.

By covering the loss of revenue during a business closure, it ensures that you can meet ongoing expenses such as salaries, rent, and utility bills even when your business isn’t generating income. 

In cases where a business needs to temporarily relocate, the policy can also cover the additional costs incurred during the relocation process.

Businesses can claim for the impact of natural disasters like floods or earthquakes, fires, explosions, and even cyber-attacks. Coverage can also extend to events like government-mandated shutdowns, supply chain disruptions, or utility outages.

It’s worth noting that policies may also cover civil disturbances, such as protests or riots, if these prevent access to your business premises. But not all policies are the same, so it’s vital to clarify with your insurer exactly what is covered.

That said, there are some events that business insurance won’t cover such as physical repairs, which are typically covered by property insurance. Nor will it cover losses resulting from slower business periods due to economic downturns or decreased demand, or losses caused by pandemics unless specifically included in the policy.

To ensure your business has the right level of coverage, it’s best to conduct a detailed risk assessment, and to regularly review your policy as your business grows or changes to stay protected against evolving risks.