Due to the spread of COVID-19, many businesses have shut their doors or adapted their services to mobile, to-go, or delivery options. Regardless of industry, however, many businesses are still suffering major losses because of the virus. This has sparked interest around business interruption insurance and if certain businesses can receive the help it provides.
This kind of insurance policy helps a business continue to pay its bills while it is closed, or income is down because of the disaster. But there is still some confusion as to its effectiveness and eligibility. Some businesses are even suing insurers for denying coverage and asking, what does business interruption insurance cover?
Here’s a better look at what exactly a business interruption insurance policy is, including what's covered and what isn't.
What does business interruption insurance cover?
There are many different things that fall under protected coverage with a business interruption policy. They include:
- Lost Revenue: If a business can’t serve customers or sell products, business interruption helps compensate for lost revenue. This policy ensures that a temporary shutdown doesn’t become a permanent closure if the owner doesn’t have the means to keep their business open.
- Rent or Lease Payments: When a disaster takes place and forces a business to close temporarily, the business owner might still have to make payments on their lease or rent, or equipment they don’t own outright. Business interruption insurance covers the cost of rental and lease payments while the business isn’t generating revenue.
- Relocation Costs: If your business has to relocate due to a devastating event, business interruption insurance helps cover the moving costs. It also pays for the rent in the new location.
- Wages: To retain employees while a business is closed, the business owner has to keep paying them their regular wages. Business interruption coverage covers the cost while their business isn’t generating revenue.
What Business Interruption Insurance Doesn’t Cover
While business interruption coverage seems like it takes care of a lot of potential problems for businesses, it comes with several roadblocks. They include:
- Property Damage: Business interruption coverage covers the financial costs of temporary closure, not the material. Property damage is covered by commercial property insurance, a piece of insurance usually included in a business owner’s policy.
- Contingent Business Interruption: Business interruption insurance only covers losses caused directly by a business’s closure. But a business can still suffer indirectly when a company they depend on is forced to shut down temporarily.
- Additional Expenses: Business interruption provides coverage for everyday expenses during a temporary shutdown. Extra expense coverage pays for expenses above and beyond a business's regular operating costs.
About Axis Insurance
At Axis Insurance Services, we aim to help our customers identify their exposures and protect themselves. Founded in 1999, we offer insurance programs to a wide variety of professionals and industries including attorneys, real estate, healthcare, architects, and more, and also have a wholesale division. We pride ourselves on offering flexible insurance coverage tailored specifically to each customer’s needs. To learn more about our solutions, contact us at (877) 787-5258 to speak with one of our professionals.