Most companies realize the importance of insuring a physical asset. Not only is it often a requirement of the financer that the asset must be insured, but given that particular assets are central to a businesses existence, it makes perfect simple sense to protect them. But what would happen if a disaster were to occur? If a fire, flood or storm were to destroy your property, yes, you may receive a payout, but what would happen to your business income if your damages property
meant that your business could not function regularly? After all, it takes time, and often lots of it to repair or replace assets, especially in more complex industries. This is where a quality Business
Interruption policy may mean the difference between bankruptcy or survival.
Business Interruption insurance works on the principal of putting the organization whose operations have been hindered into the same position had they had not been. When an incapacitating loss occurs, Business Interruption insurance shall put back into the pockets of the business, the moniesthat would have been generated by the assets that have been lost.
Take for example a recent restaurant fire, which destroyed the kitchen area of the property. Whilst the property was covered, the 8 weeks that it took to rebuild the kitchen meant a lost income stream of $100,000. Fortunately, the restaurant had an adequate Business Interruption policy in place, meaning they could cover their fixed costs whilst the damage was repaired.