Interest around business interruption insurance has grown throughout the year as businesses in various industries have had to close temporarily or even for good. Due to the spread of the coronavirus, businesses that have lost income have been trying to recoup their losses with help from stimulus while looking into where their business interruption coverage stands.
But depending on where you operate out of, business interruption insurance might not cover losses due to COVID-19. This has opened the discussion around the limits of business interruption insurance policies.
Insurance commissioners in at least seven states have advised business owners not to depend on their current coverage to fill in the gaps, including in Louisiana, Maryland, Georgia, Kansas, West Virginia, North Carolina, Mississippi, and the District of Columbia.
How Much Does Business Interruption Insurance Coverage Do You Need?
It is hard to figure out how much business interruption insurance you need. A useful measuring tool to consider is to use your gross earnings and projections to estimate future profits and determine the right amount of coverage.
Keep in mind that if your business interruption costs exceed the coverage limit you choose, you'll have to pay out of pocket for added expenses. But before you sign up for coverage, it's important to know what is left out.
Read on to get a better look at what exactly a business interruption insurance policy doesn’t cover.
What Business Interruption Insurance Doesn’t Cover
While business interruption coverage seems like it takes care of many potential problems for businesses, it comes with several roadblocks. In general, business interruption coverage doesn't protect broken items, flood or earthquake damage, utilities, or undocumented income.
More specifically, the policy doesn’t provide coverage for the following:
- Property Damage: Business interruption coverage covers the financial costs of temporary closure, not the material. Commercial property insurance protects property damage, a policy 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 regular expenses during a temporary shutdown. Extra expense coverage pays for expenses above and beyond a business's ordinary 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.