When a natural disaster or major shutdown occurs, businesses can experience an abrupt halt in operations. This can reduce revenue to zero. However, many companies have business interruption insurance policies that help them cover expenses when this occurs. At Bentley & More LLP, our California business interruption insurance attorneys are ready to help you get through this. Here, we want to discuss whether this type of insurance is a standard part of a business insurance policy or whether it is an add-on. As the COVID-19 pandemic continues to affect how businesses operate in California and throughout the country, it is important to understand all aspects of this insurance.
There are many types of business insurance
It is important to understand what business interruption insurance is and what it is not. Business interruption insurance is designed to protect businesses that have to shut down temporarily. Some of these most common types of reasons that a business may need to use this type of insurance could include:
- Fire or explosion
- Natural catastrophe (earthquake, fire, flood)
- Water damage
- Cyber-attacks on the business
- Machinery breakdown
- Loss of electricity or running water
- Supply chain disruptions
- Crime or vandalism in the area of the business
Business interruption insurance will provide compensation for the income that the business has lost that they would have earned had the shutdown not occurred. This could include:
- Lost income
- Rent or lease payments
- Relocation costs
- Employee wages
- Loan payments
This type of insurance does not cover property damage, loss, or repairs. Other types of business insurance policies provide coverage for those losses.
Is this insurance standard?
Business interruption insurance is not typically part of a standard business insurance policy. However, it will typically be offered by the carrier as an add-on endorsement to the insured businesses’ property policy.
While this type of insurance is not part of a standard policy, it is highly recommended that business owners thoroughly examine their business structure and choose whether they need business interruption protection. This can be a valuable type of insurance for businesses, particularly those in high-risk areas where natural disasters often occur.
How long these policies last will typically be defined as the “period of indemnity,” the time it takes a business to get back to the same financial position it would have been in had no loss occurred. However, for some businesses, it may take some time to return to regular economic activity, even after repairs are complete. The business may need to look at obtaining an “extended period of indemnity.”
We can help you with your business interruption insurance claim
If your business has experienced a shutdown of operations due to a natural disaster or other major event, you need to seek legal assistance today. At Bentley & More LLP, our knowledgeable and experienced team of Orange County personal injury lawyers is ready to investigate your case and work to ensure your business is treated fairly under the terms of your policy. The COVID-19 pandemic is going to continue to affect businesses in our state and throughout the US, so understanding how your policy works is important. We are not afraid to take on major insurance carriers to ensure you get the compensation you need, so contact our California business interruption insurance lawyers. You can contact us for a free consultation by clicking here.