Home Base: Why You Need Business Interruption Insurance

Your guide to running an at-home business

For the small business owner, an unforeseen disaster can bring an abrupt halt to company operations. In the event of a business slowdown or a downright closure, the inability to sell products or provide services can put an end to what you’ve built. And when your very livelihood depends on the income generated by your small business, how do you keep your head above water? Business interruption insurance  is designed to cover loss of business income.

“Business interruption insurance covers two areas–the loss of income due to a natural disaster and the extra expense associated with operating during that time of rebuilding,” says Brian Smith, InsuranceEdge advisor to American Express Open.

In most cases, business interruption insurance is sold as part of a business owner’s policy (bop) or property insurance.  “A lot of people may actually have it and not know it,” says Smith. “The business owner’s policy is a very broad-based policy for business owners who are smaller but need comprehensive coverage.”

To find out if you have business interruption insurance, contact your insurance agent. Overall, small business owners should be aware of what is covered in their property or business owner’s policy. If you’re not, use this time to understand the fine points of your policies.  Don’t be discouraged by the hefty stack of papers, a quick glance at your Declarations Page will give you a synopsis of your coverage.

“When [you] look at the Declarations Page, there will be a line in there that says “business income.” If [you] have [business interruption] coverage it’ll say “extra expenses,” explains Smith.

To file a claim, owners need to provide past financial record of the business.

For more on preparing your business for disaster, check out

Staring Down Disaster

Insurance Information Institute

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