In one of our previous blog posts, we explored the importance of having a well implemented Business Continuity Plan to adequately deal with any disruption to the daily activities of your business.

Having an effective business continuity plan assists businesses in being able to anticipate, prevent and prepare for any potential interruptions, and how best to respond to those interruptions so you can continue to service your clients. Without a plan in place, many businesses find they are unable to continue to operate when faced with such adversity as they have no contingency strategies to revert to.

As well as having a continuity plan in place, it is also important businesses consider a Business Interruption Insurance policy.

What Is Business Interruption Insurance?

Many small business owners can attest to the fact that running your own business presents a number of challenges and quite often, you are ‘flying blind’ so to speak.

It is difficult to predict the types of hurdles your business may face whether they be economical or seasonal, but by having a business interruption insurance policy in place, you can at least prepare if disaster does happen to strike.

Commonly, small businesses will be covered under a business insurance policy which may account for the damage to physical assets, but what about the resulting financial impact a disaster such as a fire, flood or storm can have upon your business?

Your income may be heavily effected by such a disaster and costs such as rent and wages will still need to be taken care of, even if you are unable to operate for days, weeks or months on end.

How Will Business Interruption Insurance Protect My Business?

Essentially, Business Interruption Insurance is there to assist your business in returning to the same financial position it was in prior to the disruption taking place.

It is extremely important to work closely with your broker to discuss the types of events or disasters that are covered under your policy to have a full understanding of how the policy will work for you.

If your business is unfortunately impacted by a disaster, your insurer will assess several factors relating to your business such as turnover, profits, seasonal variations and trends to analyse the potential loss your business will face resulting from an event.

Potential impacts a business may experience include;

• Non fulfilment  of outstanding orders
• Loss of profit margin
• Damage to stock
• Inability to honor contracts
• Loss of customers to competitors
• Difficulty in replacing the plant and machinery required to operate
• Continuing expenses such as rent, payroll, interest etc.
• Additional expenditure to continue to operate such as securing a temporary premises or staff working additional shifts

Quite often, having a Business Interruption Insurance policy in place with assist with a majority of the above factors. Without such a policy in place, many small businesses will struggle to return to normal operation without suffering a significant financial loss. In some serious cases, some businesses may be forced to close doors due to the severity of the damage and a lack of finances to recover.

Take the opportunity to be proactive and plan for any negative events that may have an impact upon your business. This includes implementing a strong Business Continuity Plan in conjunction with the appropriate insurance policies such as Business Insurance and Business Interruption Insurance so you can continue operate with the piece of mind that if disaster does strike, you won’t get caught out.

Contact us today to discuss your business insurance requirements.