As is the case with most kinds of insurance, there isn’t one amount of business interruption insurance that’s right for every business. How much coverage your Massachusetts business ought to carry depends on its risk exposure, financial position, and operations. Here’s a look at the different protections available that your business might want.

How Much Business Interruption Insurance Should My Business in Massachusetts Have?

Standard Business Interruption Insurance is for Most Businesses

Almost every business in Massachusetts should carry a standard business interruption insurance policy. This form of business income insurance generally provides compensation until a business resumes normal operations.

For example, a retail store in Boston, MA that was destroyed by a fire might receive compensation until the store could be adequately repaired or rebuilt (assuming the policy covered fires). Once the store was reconstructed and the retail business could open, a standard business interruption policy would likely stop making payments.

Most standard business interruption policies include a limit on how long they’ll make payments, stopping even if a business hasn’t resumed operations in time. What timeframe you should look for in a policy will depend on how large your business’ facility is and how complex its operations are. Rebuilding a customized factory, for instance, would probably take longer than reconstructing a basic office space. Thus, a factory owner may want a longer timeframe than a consultant working from an office needs.

Extended Business Interruption Coverage Helps Businesses That Need More Coverage

Some businesses will almost instantly begin generating revenue again as soon as their operations resume. Other businesses, however, may not see significant revenue for some time after operations resume. These businesses frequently need additional business income insurance to help cover operating expenses until revenue gets back to its pre-disaster levels.

Extended business interruption coverage is designed to provide this additional assistance. In most cases, this coverage will extend standard business interruption policies’ payments after a business resumes operations. Most extensions are for 30, 60, or 90 days.

Some examples of businesses that may need extended business interruption coverage include:

• A restaurant in Springfield, MA, which might not see customers return until several weeks after the establishment reopens

• A homebuilder in Salem, MA, who may wait weeks or months before receiving payment for work completed

• A doctor in Provincetown, MA, who also might have to wait weeks or months for payments while bills are processed by insurers

These are just a few examples of businesses that may benefit from the additional compensation that extended business interruption coverage provides. No matter what type of business you have, it may be wise to get this coverage if your business won’t see significant revenue for some time after operations resume. Whether 30, 60, or 90 days of additional payments is appropriate depends on how long you think it’ll take to begin collecting payments again.

Contingent Business Interruption Coverage for Businesses Dependent on Others

Contingent business interruption coverage usually extends the protections offered by standard and extended coverages to incidents that impact essential vendors or suppliers.

For instance, if a manufacturer relies on another company for a specific part, contingent coverage may help compensate the manufacturer if a covered incident halted the other company’s operations. The payments may help the manufacturer pay bills until it found a new supplier or its supplier recovered.

Your business might need this form of business income insurance if it’s dependent upon a single other company for a service or part. Should your business need this coverage, an insurance agent can help you find a policy that has terms and conditions suitable to your company’s situation.

Consult an Independent Agent in Massachusetts

For help determining exactly which business interruption insurance coverages your Massachusetts business should have and what time limits you should look for in policies, contact an independent insurance agent in the state. An independent agent will be able to help you choose the amount of protection your business needs and find policies that offer appropriate amounts of coverage.