Owning your own business is a risky financial investment. Contingent business interruption insurance minimizes some of the risk that accompanies ownership. Business interruption coverage is usually a part of a broader commercial insurance policy. Its purpose is to insure the losses a business encounters when a significant customer's or supplier's operations are interrupted by covered loss or damage. Most often, contingent business interruption insurance comes into play after a natural disaster temporarily suspends normal operations.
The majority of business interruption insurance policies cover loss or damage only to tangible items (equipment, inventory, warehouse, etc.), not lost profits. However, policies vary and riders can be added. The loss that businesses may experience because of a shutdown may be, in some instances, sufficient "loss" necessary to invoke business interruption coverage.
Business interruption insurance is a limited form of coverage and will normally be limited in time. Some policies may not immediately go into effect after an interruption, but instead only take effect after a certain number of days. As with every commercial insurance policy, the insured business should provide prompt notice of a claim, be prepared to prove the loss through documentation and take any reasonable steps to mitigate loss. Businesses can fall victim to circumstances beyond an owner's control – business interruption insurance can provide some reassurance that if an interruption occurs, you will be covered.
For more information on contingent business interruption insurance, contact TriState Business Insurance.
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