In the business world, nothing is ever black and white, there will always be risks. Some of the risks you can control and are in your hands, others you can’t and there isn’t anything you can do about it, just like natural disasters, or accidental fires.
A few years ago, in 2015 to be exact, natural disasters hit Chile, Nepal and the Philippines, which caused millions of people to be evacuated and caused billions of dollars of infrastructure damages. These damages included homes, as well as many businesses of all sizes. Some of these businesses were forced to close down temporarily because of these sorts of events. Others were forced to close permanently, as they did not have the money to start all over, because all their income stopped.
Both scenarios are horrible, and the effects of business interruption are being hard-felt. Surveys show that the biggest losses are a result of business interruption and that only less than ¼ of businesses are prepared for such events. This is where insurance business interruption comes in play. It reimburses the revenues a business will lose when it can’t operate after a disaster.
In order to properly protect your business, you should consider hiring an insurance business interruption broker who specializes in that field. These people usually have the knowledge and will consider factors like location, the type of business you run, and point you towards the right direction. For instance, a lawyer’s office can be re-established in a temporary office and can immediately continue with work, while a manufacturing facility needs more time to recover.
There’s additional coverage available which pays for the rental costs in another location, outsourcing customer service operations or leasing temporary equipment during the repair period. When tailored appropriately, business interruption will cover expenses like rent, salaries and health care costs even when you aren’t making money. It can also cover relocation costs and incidental costs that come with reopening an operation.
Many managers underestimate the time needed to get their business up and running. So, by determining how long you expect to be shut down, and the revenue you will lose during that time, an expert broker can work with you and tailor a policy that fits your budget and suits your needs. Some packages include terrorism and war (political violence) coverage, which covers acts of civil disobedience or an act of terrorism that will effect your operations. This is especially important for humanitarian and NGOs, as they’re the ones that are most prone to war and political violence incidents.