What is business interruption insurance?
Business interruption insurance is a policy that is available to cover the income a business would have received had an unforeseen event not occurred. For businesses affected by fire, floods and other external incidents such as police cordoning, business interruption insurance enables an organisation to pay for losses that prevent normal everyday business to take place. This is a separate area from buildings insurance, which only covers physical damage.
Who needs business interruption insurance?
There are multiple factors that can determine whether or not a business requires business interruption insurance, but essentially it comes down to whether or not substantial damage incurred by the business on it's property or physical assets would affect its ability to trade for any sustained period of time.
When considering different scenarios, for instance in the event of a flood, a sole trader who relies on a single laptop and an internet connection to work would not encounter a major problem finding a replacement machine and a temporary premises from which to operate. However, at the other end of a scale, a large business that holds substantial stock or equipment would be more exposed should its assets be damaged or destroyed.
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