As the saying goes, “it takes money to make money.” Business owners across Massachusetts are tasked with taking the profits their company earns and using it to pay rent, utilities, and salaries, purchase inventory, and invest in advertising. When a disaster strikes, forcing the business to close temporarily, no money can be made but the expenses don’t necessarily stop. With business interruption insurance, your company can be better equipt to pay its bills while repairs are being made.
Studies have shown that if a disaster forces your business to close, you have a high risk of not reopening. Many businesses suffer this fate every year in Massachusetts and across the country.
While property insurance can help cover the physical losses to your business and the cost of repairs, it cannot cover employee salaries, utility bills, or other regular expenses. These costs quickly add up and can put your business in jeopardy. Business interruption insurance helps your business stay afloat during a closure, increasing your chances of successfully reopening.
When your business closes due to a disaster or other event, you face a number of decisions. Can you – and should you – relocate to a temporary location? Can you continue to pay your employees their salaries or do you need to make lay-offs? These difficult decisions are often made on the basis of what you can afford. If you have business interruption coverage, many of the expenses you have during your closure can be covered, including:
Business interruption coverage is typically not sold as stand-alone insurance, but rather packaged with other insurance policies.
For businesses in MA, it may be sold alongside property insurance coverage, as part of a business owners policy, or as part of another package policy. This helps keep business interruption coverage affordable.
Covered events for a business interruption policy are often designed to align with the other insurance coverage they are purchased with. If your business must close due to an event not covered by your packaged property insurance, you may not have coverage.
In addition to business interruption coverage, you may also want to purchase extra expenses coverage. With this coverage, your business does not need to fully close to get reimbursed for excess expenses incurred by relocating during the repairs and restoration. Your insurance agent can help you determine if this additional coverage would be beneficial to your business.
When your business must close due to a disaster, you are still responsible for rent, utilities, and other expenses, which can quickly eat into any profits you may have earned. Without income coming in, many businesses that close never reopen. Business interruption insurance can help protect your Massachusetts business when disaster strikes. By paying for continuing expenses and reimbursing your expected income, you can keep your business alive while repairs are being made.