How to Obtain Business Interruption Insurance

Business interruption insurance helps owners like you recover lost income and wages due to naturally occurring events. Floods, fires and wind damage can all contribute to a slowdown in the services you provide. Before you obtain business interruption insurance, shop around and do your research on the best policy for your needs.

Difficulty: Moderate

Instructions

Purchase Protection Against Business Interruption

1. Locate an insurance company that specializes in your industry to obtain proper insurance. Insurance agents, underwriters and other professionals at a provider can give you better service if they have worked in your particular industry. There are specialty insurance firms throughout the United States that can help you obtain industry-specific policies.

2. Consult with your local chamber of commerce to determine if membership includes discounted insurance rates. Business insurance providers in your community may work with the city's chamber to promote their services by offering lowered rates to member companies. In addition to financial advantages, the provider has the Chamber's stamp of approval.

3. Bring in an architectural consultant to provide an assessment of your facility's integrity. This consultation will help determine the risk to natural disasters and subsequent damage based on the age and stability of your physical structures. Ask for a report on potential structural weaknesses or areas that need repair to submit for insurance purposes.

4. Put together financial statements, payroll records and other data that can be used to determine average daily losses due to interruption. Insurance companies send out adjusters to determine the extent of the damage and judge how long repairs will take. The length of time your facilities are inaccessible due to repair is the insurance payment period.

5. Compare different business interruption policies before you obtain coverage. A local provider might offer higher monthly costs than an international carrier but their knowledge of local weather conditions or terrain may provide better service down the road. Conversely, a company with a low risk for natural disaster should select the policy that better suits their financial needs.

6. Collect a complete inventory of your machinery, products and replacement parts as a supplement to your insurance application. Insurance companies who provide business interruption coverage need to know every item that will be covered by a policy.

Tips & Warnings

• Understand that business interruption insurance does not stand on its own. You need to purchase a general insurance policy for your business that includes business interruption protection as one of its main parts. Avoid companies that claim they provide stand alone business interruption policies because they are not legitimate providers.