How to Get the Best Protection from Your Business Interruption Insurance Policy
A business interruption insurance policy is an extra policy that you can acquire to protect you from losses that you would incur in the event that a risk (such as a fire outbreak) you had insured against puts a halt to your business activities for an extended period. This article discusses some things you can do to get the best from this business insurance cover.
Analyze the Possible Impact of a Closure
All insurance policies have limits on how much compensation an insured person or entity can claim once a risk occurs. This limit is usually agreed upon by the insured person/entity together with the insurance company. Some business owners are hasty in setting a cap on their cover in order to limit how much they pay in premiums but this may backfire in the event that a risk occurs. This is because you may find yourself receiving compensation that is inadequate to cover the loss suffered. For instance, the insurance company may cover your costs for a year yet the disruption drags on for several months after the time limit you set in the policy has elapsed. Avoid this challenge by imagining the worst-case scenario, and then set policy terms based on that projection.
Document Every Loss after a Risk Occurs
Insurance companies rely on records to process claims. However, business disruptions caused by risks such as fires can destroy important business documents. Ease the work of your insurance company by having back-up copies of documents (like audited books of accounts) kept at an off-site location so that it is easy to compute the lost income after the risk occurred. You should also keep elaborate records of all costs you incur (such as relocation costs when you move to temporary accommodation facilities). These records will support your claim for reimbursement by the business interruption insurance provider.
Crosscheck the Policy's Wording, Limits and Exclusions
Work closely with your insurance broker as you negotiate the insurance policy so that he or she helps you to understand the meaning/implication of all clauses in the policy. This will save you from realizing when it is too late that you are not covered for something that you thought was included in the policy. For instance, you may have thought that losses incurred when an offshore supplier is affected by a natural calamity were covered, yet the policy excluded such eventualities.
Business insurance should be tailored to address your specific needs so you should never accept anything less than what you deserve. Use the information above during your search for a provider of business interruption insurance and you will reduce your chance of having regrets when a risk occurs.