As a business owner, you take out insurance to protect your livelihood from the unexpected – the worst case scenarios, such as a flood, fire or theft. But while you’ve almost certainly taken out buildings and contents insurance for your premises, have you thought about what would happen to the business itself in the event of such a disaster?
1. What if the worst happened?
Let’s say your business premises suffers a flood, or a fire. Your buildings insurance helps you rebuild the structure of the building, and the contents insurance will help you replace all the equipment inside that you need to run your business. But how long will it take you to rebuild and replace, and what will happen to your business operations in the meantime? Could your business survive such a crisis, or might you be forced to close? Would your customers come back to you even after a lengthy period of rebuilding?
2. Loss of revenue
If the place where you do business has been destroyed or your equipment stolen, you probably won’t be able to continue trading and you therefore won’t be earning any money while you’re trying to get your business back on its feet. That’s where business interruption insurance comes in. It’s there to cover your loss of income in the weeks and months following a catastrophe, whether that’s because your shop needs to close or you have to rebuild your factory. It will also cover things like the cost of renting other premises during the rebuild.
3. What period of time should you get cover for?
The period of time for which your business interruption insurance provides you with an income is known as the indemnity period, and it’s typically up to twelve months but can be more than this depending on your business needs. It’s difficult to estimate how long your business would be out of action in a hypothetical situation, but try to think about things like how long it would take to replace stock, source replacement machinery or equipment and rebuild your facilities (or find new ones).
4. Have you got enough cover?
As with any kind of insurance, it’s important to ensure you take out the right level of cover to protect your business. Don’t forget to think about how much your business would normally grow during the indemnity period you’ve chosen so that your insurance continues to provide enough income. Think about your normal overheads, too – costs such as staff salaries will still need to be paid.
If you think you’d like the peace of mind that your business could stay afloat in the event of a disaster, please speak to our specialists at A-Plan and we’d be happy to talk you through the kind of business interruption cover your business could benefit from.