Contractors’ insurance is designed to protect contractors from all the potential risks they could face while out on the job, or at their place of business, in their warehouses, or from worksite to worksite. A comprehensive contractors insurance package should include coverage for every aspect of your business to preserve your peace-of-mind – including business interruption insurance. Choose the Right contractor Liability Insurance Broker.
Business interruption insurance is an integral component of an all-encompassing contractor’s insurance package. See, for contractors, a period of downtime could spell devastation for their business. Just think: if something happened, say a fire to your warehouse, how could you continue operations as per usual without the equipment that was lost in the incident?
Business interruption serves to keep businesses aloft even in the darkest of times. Here’s why you should consider including business interruption insurance as part of your comprehensive contractor’s insurance package.
What is business interruption insurance?
Business interruption insurance is a type of commercial insurance that is designed to replace business income that is lost because of an insurable disaster. As an example, say a fire struck your warehouse. Your commercial property insurance may cover the losses and cost of repairs for your warehouse, but during the period of rebuild, you’ll likely be unable to work – or unable to work to the same capacity you did prior. Business interruption insurance ensures that there’s compensation to bridge the gaps until your business can reopen and return to operations as usual. Business interruption insurance is not sold as separate coverage, but rather is available to purchase as an add-on to an existing comprehensive contractors insurance policy containing commercial property coverage.
Business interruption insurance coverage varies from provider to provider, but generally includes:
- Operating expenses: Your business interruption insurance may include coverage for fixed costs, such as the incurred costs of doing business.
- Temporary re–location: If your business decides to temporary relocate to keep up doing business, some policies will cover moving and operating costs from a temporary location.
- Profits: Business interruption may cover lost profits based on your prior months’ performance (or based on an average of stats, varying from provider to provider.)
- Reasonable expenses: Your business interruption insurance may offer reimbursement for reasonable expenses that extend beyond fixed costs so that your business can get back to operating as per usual once repairs are complete.
- Civil ingress/egress: If your business suffered a government-mandated closure due to street closures or government-issued curfews, business interruption may cover lost costs.
- Taxes: Even following a natural disaster, you’ll still be expected to pay taxes. Your business interruption insurance may include some level of coverage for tax payment.
- Employee wages: Your business won’t want to lose employees after a period of forced closure. Your business interruption insurance may include coverage for your employee wages.
- Loan payments: If you pay loans monthly and cannot make those payments due to a forced closure, your business interruption can help you cover those costs.
Note that business interruption insurance has its limitations. Business interruption insurance won’t cover the physical cost of repairs or any broken items resulting from a covered loss, it won’t cover flooding or earthquake damage, it may not cover utility bills (depending on your provider), and it won’t cover interruptions due to pandemics, viruses, or communicable diseases – including COVID-19.
Why does my contracting business need business interruption insurance?
Business interruption insurance is a must-have as part of your overarching contractor’s insurance package. If someone happened which forced your business to temporary shut its doors, how would you stay afloat? Business interruption insurance policies are designed to last until the end of the business interruption period, which is typically defined in your insurance policy. A standard policy may last for 30 days, but endorsements can extend closure duration to up to 360 days. The majority of business interruption insurance policies will define this period as the date that the insured peril first began until the day when the damaged property is fully repaired and returned to the condition that it was in prior to the disaster. In essence, business interruption insurance removes the “what ifs.”
Business interruption insurance helps:
- Cover lost income. If you experience a loss, you’re likely unable to operate as you would prior to the loss – either partially or at all. Business interruption insurance offers reimbursement for the lost profits that you would have experienced had the peril not occurred.
- Covers ongoing expenses. If you’re not generating revenue during a period of forced closure, you’ll have trouble paying any ongoing expenses, such as bills, employee wages, loans, and so forth. Business interruption insurance can help cover these expenses to spare your business from going under during this trying time.
- You get back on your feet. A forced closure is a stressful time for all – even your customers! What will they do without your business? Many businesses don’t have the financial muscle to get back on their feet and recoup following such a loss, so having business interruption insurance can be the thing that makes or breaks your future.
Business interruption insurance is a vital part of a contractor’s insurance package – and not just for contractors, either. Any business that wants to continue operating for years and years to come may benefit from business interruption insurance.
Discuss with a EasyCover Insurance representative today about the possibility of including business interruption insurance as part of your contractor’s insurance package. You can even request a quote in just a few minutes online. Simply click the “Get a Quote” button, fill out the form with questions about your business, and purchase online!