Understanding Your BOP’s Interruption Coverage

Understanding Your BOP’s Interruption Coverage

A business owner’s policy, or BOP, contains several critical elements of business insurance. Among these, you will likely find business interruption insurance—one of the most critical elements of protection any business needs. If you don’t fully understand this coverage, you might not be able to use it to your advantage. Let’s explore the topic a little closer. 

What Is Interruption Insurance? 

If you decide to invest in a BOP, ask if it will include business interruption protection. If this is the case, don’t let the opportunity to get coverage pass you by. 

Suppose that a severe storm damages your storefront. It might break out windows, put holes in the roof and cause structural damage. When the storm passes, you are going to need to take time to repair the business. In many cases, your business will need to shut down while making the necessary repairs. That can hurt you financially if you don’t have protection. You’ll need plenty of time to repair the business, but lost time equals money lost. 

Your BOP likely has property coverage, which can help you pay for the repairs to your business following a loss. However, property coverage alone won’t cover the money you lose simply through lack of operations. Therefore, you stand to lose out financially during this closure. If you don’t have appropriate insurance protection for this risk, you might even sustain irreparable losses. 

Business interruption coverage can protect you in these scenarios. If a covered event causes a temporary closure in the business, you won’t lose out financially in the meantime. It will help supplement your costs and expenses incurred during the closure. It can even help you pay for: 

• The expenses of temporarily relocating the business 
• Back expenses, such as employee salaries or vendor fees 
• An estimated profit that you might have earned had you been able to operate 

In any case, you’ll get a financial cushion during a time of a potentially significant loss. When you can’t operate, let business interruption coverage serve as a cushion to put your mind at ease. 

The good news is most BOPs will automatically include interruption coverage. So, when getting your BOP, ask your agent to explain to you the details of your policy options. Most policies won’t cover every interruption expense. They will also have limits on how much money you can receive in compensation, so it’s a good idea to work closely with your agent to determine the right amount of coverage.