How Business Interruption Insurance Works in Florida

Knowing how business interruption insurance works in Florida can help stay on top of your game if something goes wrong in your business. You have a thriving business with operations running smoothly. Suddenly, an unforeseen event comes up. There’s a fire outbreak that destroys business assets. Or a tree falls on your business property preventing you from working there.

All of these could mean more than just a cursory business closure. It could mean a prolonged period of shutdown especially if you don’t have business insurance. Think of what this could do to a business too. 

It would mean loss of income, loss of valuable staff, and getting behind on debt repayment. In fact, the Federal Emergency Management Agency reports that nearly 25 percent of businesses do not reopen after disasters. 

Your business does not have to be part of the statistics. With business interruption insurance, you can put some hedge around your business and prepare it to bounce back from any interruption it may face.

In this article, we will look at how this insurance works in the state of Florida, including what it covers. Let’s get into it.

What Is Business Interruption Insurance?

Business Interruption Insurance is a type of insurance policy that protects your business from income loss during a time of temporary closure. 

This insurance is also called business income insurance because it helps substitute the income you would have gotten if your business was operating normally. Essentially, business interruption insurance ensures that if your business shuts down for only a short time. 

It provides you with the income you need to keep your business afloat during the restoration period when you work on fixing the things that caused the closure.

The restoration period may be for buying new equipment and training staff to use it. It could also be to repair roofs and other structures that a fire, lightning, or unpredictable Florida storms damaged in your business property. 

Beyond that, it could simply be moving to a new location to continue your business. Business interruption insurance aids your business through all of these instances. Keep in mind that this restoration period is usually from 30 days to 360 days in extreme cases.

Also Read: Do You Need Business Insurance for an LLC in Florida?

Who Needs Business Interruption Insurance?

As a business owner, it’s advisable to buy business interruption insurance with an insurance company. That way you can be certain that your business is covered if some unforeseen event comes up in the future. 

Businesses that project into the future always find a way to get this insurance in their portfolio. While some business owners complain of high monthly premiums as the reason they don’t have business interruption insurance, it’s not enough reason to ignore it. 

There are ways around the premium payment. You can choose to bundle your business interruption insurance with other insurance forms. Add it to your general liability insurance and commercial property insurance bundle. 

The three policies are bundled together as Business Owners Policy – BOP. Certainly, you’ll find that it’s cheaper than buying it as a single policy. If you want to get a more affordable premium, policy bundling is the way to go.

What Does Florida Business Interruption Insurance Covers?

In Florida, business interruption insurance covers a lot of incidences, enough to ensure that you get compensation for a lot of occurrences.

Let’s see the specific items it covers.

1. Lost income replacement

Shutting down your business for a while might mean that your business will not produce the income it used to bring. When that happens, you can file a claim to your insurer for business interruption insurance. 

With that, they can reimburse you and give you funds that your business would have made in the period it was shut down. This way, you can still have funds to do things around your business especially if you depend solely on your business income.

2. Fixed operating expenses

When running a business, businesses often have some running expenses that are specific and come daily, weekly, or monthly. These expenses often come and you must pay them, whether or not the business is in operation.

Fortunately, operating expenses are one of the areas that business interruption insurance covers. With the compensation you get from this insurance, you can ensure that you continue to pay your expenses as and when due until your business is stable again.

3. Temporary relocation

There may be times when a business may no option but to relocate to another location for the time being. This often happens if some parts of the business premises are damaged or under repair. Or if the government asks you to close down in a particular location.

In that case, you may need some form of compensation from your insurer to move to the new location. Business interruption insurance covers the cost of such relocation to the extent that your policy agreement allows.

Also Read: How to Get the Best Commercial Property Insurance Quote in Louisiana 

4. Recurring payments

Let’s face it, workers will not wait around without wages if there is an interruption in business operations. And you won’t blame them. They also need to take care of their families.

Business interruption insurance helps you with funds to pay your workers pending the time the business will be back in full swing. It also covers other recurrent expenses like tax and mortgage payments during the period the business is is not in session.

5. Retraining costs

If your business equipment is damaged, destroyed, or stolen. You’ll likely replace them to keep your business in operation. 

But sometimes, you need to train your staff on how to use the new equipment you bought. You don’t have to do it out of pocket. Your business interruption insurance covers staff retaining costs too, so businesses can retrain their workers if they need to.

What Florida Business Interruption Insurance Does Not Cover

While it’s true that business interruption insurance covers a lot of incidences ranging from fire to theft and other unforeseen occurrences. It doesn’t cover every type of incidence.

That’s why there are many types of insurance with each of them covering specific items. Here are some events business interruption insurance does not cover:

• Glass breakage
• Flood and hurricane damage
• Business closure from airborne diseases like COVID-19

Protect Your Business from Interruptions

As long as you’re in business, interruptions are bound to occur. Oftentimes, whether your business will bounce back from these interruptions will depend on the measures you put in place.

Smart business owners choose to plan for the unforeseeable future. One of the best ways to do that is to buy business interruption insurance coverage. Get one today and give your business the protection it deserves. Check out the challenges policyholders face in the insurance industry.