Business interruption insurance is also known as earnings insurance, profits insurance and business income insurance. These insurance policies are created for protection of a business owner in the case they have to shut down. Without business interruption insurance the business owner could lose a ton of money in the event a fire, robbery or other incidence occurred that caused a necessary closing of the business.

Business owners often think of protecting their profits or earnings with insurance policies such disability coverage and may even consider other not so popular policies such as key person insurance or sell buy insurance. The key insurance policy will protect the loss of profits to a business in the event a particular person who is responsible for producing profits for the business is injured or dies, the buy sell insurance policy will protect against the injury or death of a partner in the business.

A successful business owner knows how to plan for unexpected events and will have insurance policies in place to protect the business in the event of disability, injury, death, and forced closure due to fire or other disasters.

Net profits and continued expenses are part of the coverage to the business interruption insurance policy. The business owner will be protected against not only the lost profits but will be reimbursed for expenses that are incurred for operating the business elsewhere or to pay the bills on the building that is being repaired.

Some main key components that are covered in a business interruption insurance policy are explained below:

According to the financial records of the business the profits that were expected to be earned will be covered. Building expenses that cannot be discontinued during the repair such as electric and water bills will be covered. Expenses for operating the business from a temporary location is covered.

You will not be able to purchase a business interruption insurance policy by itself you will need to treat it as an add-on to your property insurance or other small business package. Speak to your agent to find out more information.

You have to realize that if your business were to suffer a fire or other damaging occurrence and to be forced to close the doors it would cost you money. The property insurance may pay for the repairs but who is responsible for the electricity, water or relocation costs? If you cannot relocate and are losing profits or earnings you rely on to live, how long will you last? Without adequate insurance coverage any event can lead to disaster. The fact is there are many business owners who would be unable to keep up with the bills while not seeing any profit due to lack of production and the business would ultimately be destroyed in the process as well as the owners business credit that had been established. A loss of business can be devastating and completely unnecessary if the right precautions are taken to prevent it.

Susan Reynolds is the webmaster for a leading South African Insurance provider who specialises in Commercial Insurance.

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