What would you do if a crisis hit your business, such as a flood, fire or some kind of systems breakdown? Could your enterprise survive the disruption it would cause to the services you provide? Would you be able to continue trading? Regardless of how well you run your company, there are events that can occur outside of your control, derailing your business and causing irreparable damage. However, you can protect yourself against such circumstances with business interruption insurance.
Covering your enterprise for loss of income during periods when you can’t carry out your normal business service due to an unexpected event, business interruption insurance can help you keep going in times of crisis and get your company back on its feet as soon as possible.
The most basic business interruption policies cover your business for damage to your premises or equipment caused by fire, flooding or storm, as well as the breakdown of your essential equipment. Some policies also include cover for things like customers not having access to your business premises, or damage caused at your premises by a supplier or customer. There are even specialist policies for computers and systems, protecting against cyber risks like viruses and hacking.
Business interruption insurance can provide compensation for loss of income, supporting you as you get back to trading and keeping you going while you rebuild, and helping you to pay employees, etc. If you make a successful claim, you can be compensated for any pre-tax shortfall in profits as well as the increased costs of running your business as a result of the event.
If you decide your enterprise needs business interruption insurance, you can take out a separate policy, although it might prove more cost-effective if you include it in a tailored package with the other forms of business insurance you need, such as a contents policy, employer’s liability insurance, public liability insurance, product liability insurance, professional indemnity insurance, buildings insurance, goods in transit cover, etc.
### Is it for you?
So do you really need it? It’s up to you to assess the level of risk you are under from the kind of events that are covered by business interruption insurance. There are certain precautions you can take against things like fire, but the risk of flooding, for example, will vary considerably according to the specific location of your business premises. As recent years have shown, the UK infrastructure is vulnerable in the face of long periods of unsettled weather, with flooding regularly causing chaos in many parts of the country.
Regardless of how much risk you perceive your business to be under, you might decide that business interruption insurance is well worth the peace of mind it offers you and the protection it can provide against the many events that could occur beyond your control. You might also find the cover represents a negligible outlay, especially when included in a wider business insurance package.