This insurance protects a business owner for any losses resulting from a business shutdown caused by an “insured peril.” This peril can include anything, but most often refers to a fire or “act of God.” The policy most often reimburses the holder for any lost net profits and any expenses needed to continue business.

Drilling down into coverage, business interruption insurance can cover the income your business would have made during the period that your business location is deemed unusable. In order to determine this amount, the insurer will use your company’s historical financial records. The costs and expenses incurred by your business although the location is unusable can be covered as well. The insurer may cover any costs stemming from running your business from a temporary location. There may also be something called extra expense coverage, which is often offered to lower business interruption costs. Such an example is if your power goes out during a storm and you find that it would be cheaper to rent a generator than shut down your company. The insurance company will likely cover the generator rental since it is the cheaper option.

Make sure to check into the type of policy you need for your business, as there are many choices to make as far as business interruption service is concerned. It is often recommended that such a policy cover any expenses needed to run your business at a different location due to any damages sustained by your original place of business.

It is not a stretch to say that business interruption service is the most important insurance your company can purchase. Unfortunately, this sort of policy is often overlooked – don’t allow yourself to make this mistake, it could save your business in a time of crisis.