What is business interruption insurance?

Would your business survive if disaster strikes?

Many small businesses that suffer a crisis, either directly or indirectly, will no longer be trading 12 months later.  This is not a reflection on the way a business is run. Instead, it reflects the fact that small businesses often don't have the resources to cope with disasters that cause them to lose money.

Most businesses buy insurance to protect the physical assets of the business, however business interruption insurance is designed to protect a business's revenue.  In doing so, it can help the business survive a crisis relatively intact.

Business interruption in a nutshell

Business interruption insurance provides cover for losses arising from disruption to a business, when that disruption was caused by some kind of material damage.

For example, if there was a flood and it destroyed the contents of your business premises, it is likely that you would be unable to operate for a period of time. Your business would lose custom and therefore revenue.  But, as long as your business contents were also insured, your business interruption insurance would cover your lost revenue.

Why take out business interruption cover?

• Disaster can strike at any time
• It helps you get back to trading asap
• It helps you to pay your employees
• It helps you while you rebuild

In August 2004, flash floods in Devon caused complete devastation of many homes and businesses.  Many pubs, hotels and shops were unable to start trading again for more than two years.