The past year’s COVID-19 pandemic exposed what most businesses fear—bankruptcy. As people continue to catch the virus, many countries still keep their borders closed, affecting most firms in the process.
The lack of customers became a significant reason companies had to close their shops and hope for the best. Although the decision to halt operations is the best way to protect their employees and customers, enterprises suffer the longer the lockdowns go on.
As the constant stream of income stopped coming in, business owners decided to seek financial help from their trusted financial institutions. However, despite the aid provided, what they got out of the policies does not sustain a dying brand. But another type of insurance policy came in handy—the business interruption insurance, which became the saving grace of the pandemic.
What is a Business Interruption Insurance?
A business interruption insurance is an add-on policy on top of a property or casualty policy included in a comprehensive package policy. It covers businesses suffering from unexpected cease of operations during a period of “restoration.” However, it requires the suspension to be caused by direct physical loss, damage, or destruction to insured property.
1. It Covers Loss Sustained
The policy covers the actual loss sustained by businesses, considering the causes are direct physical loss or damage to the insured policy by a peril. In effect, the policy will require the insurer to pay if the insured property sustains business interruption enough to lead to income loss. However, the “loss” will be subject to policy limits applicable to the location where the incident happened.
2. It Takes Care of Business Income
During a restoration period, if a business continues to pay for the taxes and fees from running the company, the policy should shoulder the expenses. It will only be the case if the business interruption happens due to a physical loss at an insured’s premises. The insurer should take care of the business income in accordance with the policy’s limits. The inclusion is beneficial for businesses that continue paying their employees despite the hardships brought on by the pandemic.
3. It Ensures Seamless Restoration Period
The period of restoration is the most crucial part of reestablishing an interrupted business. It is the time where a company rebuilds, repairs, or replaces damaged or destroyed property in preparation for the business’ re-opening.
However, the policy doesn’t stop abruptly after the business has been rebuilt. Instead, the policy will include a thirty-day extended period of restoration provision to cover for the time most companies need to get back on their feet. Meanwhile, after reaching one month, business owners can request an extension for another thirty days to a maximum of 720 days by purchasing an extended period of indemnity endorsement by choice.
Conclusion
The pandemic has tested everyone’s ability to cope and adapt to the new normal. Although it was a challenging year and a half for everybody, business owners still have a chance to redeem their hard-earned businesses and get back on their feet as soon as the pandemic ceases. People don’t have to start from scratch and lose what they have established through business interruption insurance. Meanwhile, as the world continues to open back its borders and industries recover from the hard fall, insurance companies remain a helping hand for individuals, entrepreneurs, and business owners alike.
Quesurance Group aims to help people in business to succeed. As one of the best insurance companies in New Jersey, our goal is to provide policies that support small businesses to grow as one of the industry’s best. Discover our commercial insurance policies by booking a meeting with us today!
