Business interruption (BI) insurance can be one of the most vital kinds of insurance that you ever purchase. It can ensure that you can pay your bills and feed your family in the event that your business can’t bring in the revenue that it normally brings in.
But despite its importance, many people know very little about business interruption insurance, what it does, and what it insures and doesn’t insure. Our Chicago business attorney at Ellis Legal will explain more on this below.
Physical Damage to the Business
Like any insurance policy, what your BI policy covers will vary from policy to policy and, of course, based on what you are willing to pay.
As a general rule, business interruption insurance will pay for your business’s financial losses in the event of any physical loss or damage to the property that keeps it from being able to operate as it normally does.
BI does not help you pay to actually repair the physical premises—BI is only to help you get compensated for the financial losses stemming from a physical loss or damage to the property.
Note the term “physical loss”; that means that non-physical problems, like, say, a law change that makes it impossible to operate your business, would not be covered.
Expenses are Insured Also
One good thing about business interruption insurance is that many policies don’t just cover your lost revenues and income, but they also will insure you for expenses related to getting your business back on track—for example, the cost of relocating an office, or an increase in rent that you incur, because of a temporary relocation.
BI also will, in some cases, pay for your business’ continuing debts and liabilities, such as loan or lease payments that you cannot pay because of an insured loss.
Who Caused the Loss?
Sometimes, the policy’s coverage will depend on whether or not you caused the business loss or whether you could have avoided it.
So, for example, if your restaurant cannot operate because it was shut down for health code violations or if it is unable to open because you have to make repairs to make the premises compliant with the ADA, those may not be covered, as they are things that (according to your insurer) you could have known about and avoided in advance.
Other things may be out of your control—for example, if the government were to condemn your business’ building because of a roof leak, and you don’t own the building itself, you may be covered.
Speaking of the government, again, so long as you aren’t the cause of the problem, your BI will generally cover you for losses incurred for government actions that shut down your business or make it impossible to operate. For example, if a road were to need complete repair and it was closed, and the road was the only access to and from your business, you may have an argument that the government action had the effect of completely shutting down your business.
Question about your business’ insurances? Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629 today.