What is Business Interruption Insurance?

Business interruption insurance is insurance coverage that replaces income lost in a disaster. The event that causes the interruption can vary, but generally, it is a fire or natural disaster. Business interruption insurance is not sold as a separate policy but is either added to a property/casualty policy or included in a comprehensive package policy as a rider, or add-on.

What all is covered?

Business interruption insurance replaces income lost in the event that business is halted due to damage. This coverage will also cover operating expenses or a move to a temporary location. Additionally, the coverage will also cover other necessities, such as payroll, taxes and loan payments. One important caveat of business Insurance: standard business interruption insurance does not reimburse policy holders if the business is closed due to a pandemic.  

Tax Deductible?

Business interruption premiums, or at least the cost of the rider, are tax-deductible as ordinary business expenses. This type of policy will only pay out if the cause of the business income loss is covered in the underlying property/casualty policy. Additionally, coverage lasts until the end of the business interruption period, as determined by the insurance policy itself. The standard policy is usually 30 days but using an endorsement can extend it to 360 days.

Summary

In general, business interruption insurance is a great, safe way to mitigate risk to your business. To summarize, most standard business interruption policies cover the following:

• Profits
• Fixed costs
• Temporary location
• Commission and training cost
• Extra expenses
• Civil authority ingress/egress
• Employee wages
• Taxes
• Loan payments

2020 has been an unprecedented year for many people and businesses. At Ramey King Insurance, we specialize in helping businesses find the best coverage and strive to help businesses mitigate risk during these uncertain times. Contact one of our Commercial Agents today to start your protecting your business.