The 5 most important things you need to know as a business owner about BI Insurance

The 5 most important things you need to know as a business owner about BI Insurance

As a business owner you know that covering your business if it is damaged in anyway is important. Afterall, you need to cover the costs of repairing the damage. However, do you know how important it is to cover the loss of income if you have to close your business for a prolonged amount of time? What about paying your employees and the bills if you have no income? How long would your business survive if you had no revenue coming in?

Here are the five most important things you need to know about BI Insurance.

1. What does Business Insurance cover?

Business Insurance covers the buildings, contents, stock and other items that are likely to be lost in the event of damage by for example a fire, flood, storm, water damage or other ‘peril’ which is the word insurers use to describe what you are covered for.

The most important factor to consider is the current cost of rebuilding the entire premises if it all was lost. Get that figure right and you are halfway to being properly insured. Get it wrong and you could be in trouble, for a very long time. Your broker will help you to get to the right figure.

2. What is Business Interruption Insurance?

Business Interruption covers your business when damage to your business impacts your operations and output. It basically keeps your business alive if you have to stop trading due to any of the ‘perils’ stated above. When cash flow stops it is almost impossible to pay your staff and bills as been demonstrated throughout the COVID pandemic.

3. What you need to think about when taking out BI Insurance

You must pay particular attention to these points when taking out BI Insurance:

  1. The amount of money you would need in a year if you do not earn any revenue but have to pay the bills and not lose your staff.
  2. The realistic time it would take to repair and reinstate your business premises after a loss.
  3. The risk you run of losing customers if there is any break in your ability to deliver as usual. The time it would take you to rebuild your customer base to reach a level of turnover and profitability that you enjoyed before the loss.

4. How has COVID-19 impacted BI Insurance?

A problem that has come to light since the COVID pandemic is that ordinary BI covers the business for the cost of keeping it alive whilst the damage sustained to it is repaired and reinstated. However, in the case of COVID there was no damage as such, but businesses up and down the country were shut because the government ordered it. Insurance companies refused to pay out on their BI policies because there had been no damage caused by an insured peril; i.e fire, flood etc.  Therefore, there is now a known need for non-damage BI insurance as well as traditional damage BI Insurance.


5. So what do you do next time you renew your policy or take it out for the first time?

Firstly, appoint a Broker! Wherever you live in the country you will find a competent insurance Broker within a few miles of your home or business, there are some 3000 firms of Brokers to choose from.

Speak to your broker about non-damage BI Insurance and ask them to search what is on offer. To ensure that your BI truly does protect your revenue/turnover and profitability you will need to find the right information which can be found in your management and annual accounts.


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