Am I Paranoid Or Do I Need Business Operations Insurance?
Business operations insurance, also known by other names like business overhead insurance and business interruption insurance, is a safeguard against challenges that temporarily limit or stop your business from operating. During times like these, revenue can sharply decline and even stop altogether. If this should occur and you don’t have something in place to protect your business, the future will be jeopardized and the long-term viability of your company may come into question. With business operations insurance, you’ll have the coverage you need to pay your expenses in the tough times and continue on your course to success.
How does it work?
Business operations insurance cannot be counted on in every situation, meaning that financial hardship isn’t necessary enough to trigger your coverage. Before the insurance can be used, your business needs to be deemed “inoperable” for some specific reason. “Generally, business interruption insurance can only be activated when there is an open claim on your policy for the loss of your business” (smallbusiness.chron.com). The coverage can include reimbursement for things like utility expenses that continue to pile up even when your business isn’t operating as usual.
The Insurance Bureau of Canada distinguishes between “Named Peril” business interruption insurance and “All Risk” business interruption insurance (www.ibc.ca). As you may have guessed, named peril insurance only covers incidents and situations that are specifically named as features of the policy, while all risk insurance protects against loss caused by any risk. Businesses pay more for all risk business interruption insurance since it is the more comprehensive of the two. Before making a decision, you’ll need to decide what your specific risks are and how extensive you think your insurance needs to be.
The indemnity period of your business operations insurance coverage can also be chosen based on your perceived needs. Limited indemnity policies only pay until the damage is repaired, while extended indemnity actually continues to pay until your business is up and running again in that manner that it was before it was interrupted.
Considering business operations insurance doesn’t make you paranoid. Rather, it’s just a wise thing to do, because things can and do happen all of the time. A natural disaster or major accident could drastically limit the functional capabilities of your business for a period of time. This can have an adverse effect on you and your employees so why not plan ahead and invest in protection that will be more than worth it when something happens? Even if you have to shut down for awhile, the bills will keep piling up. Not only that, but the cost of repairing or replacing damaged property without coverage could be enough to prevent your business from ever operating at the same level again.
Speak with an insurance broker to find out what coverage options are available for your business. Ask lots of questions to get a clear understanding of what you need and what’s out there, and then make a well-informed decision. With an affordable business operations insurance plan, you can make a wise financial choice that protects the viability of your company in the long run.