While taking precautions to protect your business will reduce the likelihood of negative impacts, there is still a chance of something bad happening. If it does, then your business needs to be protected. According to Allianz, one of the top financial risks to any business is business interruption. This is when an event causes a potential business to have to stop its operations for a period of time. 

You don’t even need to have a brick-and-mortar business to suffer from potential business interruption. For example, floods and fires can affect small, at-home businesses just as much as they can affect the grocery store down the street. In fact, small businesses may be at more risk from potential business interruption because they often do not have contingencies in places, such as extra equipment or properties, that can help them continue to function when something happens. 

Potential Business Interruption Insurance:

Business interruption insurance compensates a business for the loss of revenue that can result from a covered risk. For example, severe flooding may cause a retail store to shut down for several days or longer so the water can be drained and water damage can be repaired.

If something like this were to happen, it would require you to not just pay for the repairs or replacement, but also you would be missing out on customers who might come to the store to buy things. 

Business interruption insurance will specifically cover that loss of revenue. This will minimize the financial damage and keep the lights on and your staff paid.

However, while the potential business interruption will cover those costs or prices, the commercial property insurance you will need will cover you for your property and equipment’s repair and replacement costs. Business interruption coverage is usually a part of your commercial property policy. 

Here are some of the most common types of business interruption claims. 

Explosions and Fire:

A fire or large explosion will absolutely cause you to shut down your business. This is because the structure could be unsafe, or there may be a risk from airborne contaminants. It can take days or weeks to make sure that everything is back up to where it should be before it is safe to open back up again. 

Some businesses are more at risk for this type of hazard than others. Restaurants, for example, could have open flames, grease, and hot surfaces that can all cause a fire. Workplaces that have heavy equipment may have propane tanks or other flammable materials on hand that can explode if handled improperly.

When there’s a fire, the first step is to make sure that everyone in the building is safe while calling the fire department. The next step is to contact your insurance provider to activate your potential business interruption insurance. 

Cyber Attacks:

There are over two-thousand cyber attacks aimed at businesses and people in the United States every day. Not all of these are aimed at causing identity theft. While identity theft is serious enough, in many cases, the purpose of the attack is to install ransomware in the network of the targeted organization. Ransomware will block out the employees of the business from using their data, effectively shutting down the business as a whole. 

The business must then come up with the funds to pay off the attackers or hire a firm to come and fix the issue and recover the data. While this is all happening, the company will have no access to its data portals or systems and will not be able to conduct business as usual. More than ever, companies rely on digital and cloud-based technologies in their day-to-day operations, and a ransomware attack can be crippling. 

Pandemic:

By now, everyone is familiar with what might happen in the event of a pandemic. All around the world, businesses had to shut down because of public health initiatives or because they simply didn’t have staff available to work. Some may also have been interrupted because of supply chain issues from other businesses that were feeling the effects of the pandemic. 

You might think that there is no way another pandemic could hit since it has been so short since the last one. However, we simply have no way of knowing when it might happen again, and if it does, you will want to be prepared. 

Natural Disasters:

It seems like there are new natural disasters around the world every day. From storms to earthquakes, the natural world can be a fearsome force. Not only will natural disasters affect your location, but they can impact other businesses that you work with. The global market means that more of us are connected, and what happens in one part of the world can certainly affect businesses in the United States. 

For example, a supplier located in Europe may have been the victim of mass flooding. Everything that they were going to ship to you is delayed, meaning that you can’t manufacture your product and meet demand. This will cause an interruption, and you will lose revenue. A claim to your insurance can help mitigate that damage. 

Machinery Issues:

Many companies rely heavily on their equipment and machinery. For example, if you are manufacturing products, you might have an assembly line that puts pieces together. If there is a breakdown, then everything comes to a halt. Shipments and orders get delayed, and you will have to go into crisis mode to contact clients to notify them. 

This is a common claim because the more complex machinery is, the more likely it is to break down. Of course, you need a regular maintenance program for your equipment, but that won’t prevent all issues. A machinery breakdown will have an impact on your business just like a fire or flood would. 

As you can see, there are many reasons why you might have to make a business interruption claim. When your business isn’t operating, you are losing money. Unfortunately, even though you are losing money, you will still need to pay the bills. Business interruption insurance will ensure that no matter what happens if your business has to shut down, you can be protected from your losses and keep your potential business afloat.