If severe storm damage caused your business to shut down, would you be able to sustain the company while the repairs were being made? If the closure spanned several months would you be able to pay the continuing expenses such as the mortgage or rent, taxes, the salaries of you and your employees, vendor invoices and other bills on top of the repair costs?

Less than half of all businesses have interruption insurance built into their business owner's policy (BOP). Those that don't, often find they do not have enough income to continue to operate the business when a loss is suffered, or, in some cases, they begin to deplete their reserves.

Make Sure You are Fully Covered

Business interruption insurance replaces normal business income when insured losses negatively impact a business's bottom line. It reimburses a company for lost income until the company is able to resume full operations. For instance, if a business is inoperable for a month due to a fire or storm damage, business interruption insurance would typically reimburse the company in the amount of the net income that would have been expected for that same month based on previous history.

When comparing business insurance rates, be sure to check what is covered in the business insurance policy. In some instances, damages resulting from windstorms, earthquakes and floods are covered separately by special policies. If this is the case, you may need to purchase individual insurance for each. If these other policies don't include business interruption insurance, you may want to consider purchasing a separate policy that solely covers business interruption. This is particularly important for businesses located in Florida or the Gulf Coast, where hurricanes can wipe out entire operations. In some cases businesses with special risks may not be able to receive coverage on business interruption in their BOPs, but may still be able to purchase it separately.

Many policies will include some coverage for the lack of profits due to unplanned interruptions in business, such as losses associated with property damage or theft. Business owners who have general liability insurance should not assume, however, that their insurance policy includes business interruption coverage.

The Cost of Operating Without Interruption Insurance

Unforeseen interruptions can also spark extra expenses including rent on another temporary office space, leased furniture and equipment, or overtime paid to employees when trying to speed the recovery process. If a business is not generating income after suffering damages, these additional expenses can put a tremendous strain on finances.

Additionally, as a business owner you might want to consider purchasing business interruption insurance to protect against interruptions that result from a direct loss on someone else's property. For instance, if one of your main suppliers suffers fire damage and is unable to deliver the critical materials that are key to your operation, it could cause a significant interruption.

Business insurance rates vary based on several factors including the size of the business, the scope of work delivered, and number of employees, among other variables. While business insurance coverage can seem costly, it is an expense that is vital to your company. It can safeguard you and your company's assets from a variety of unforeseen damages that may occur. Your insurer should be able to tell you what business insurance coverage will best fit your needs, which will also determine the cost.

In the long run, business insurance coverage that specifically addresses damages will be what helps sustain your company through a disaster and may even save your company from financial hardship or bankruptcy.