The Average Costs Of Business Interruption Insurance
Business interruption insurance is a type of insurance that can provide financial protection to a business in the event that it is forced to close or suspend operations due to a covered event such as natural disasters, fires, and theft. The average cost of business interruption insurance varies depending on a number of factors and can range anywhere from a few hundred dollars to several thousand dollars per year for this type of coverage. Here are some factors that affect the costs of business interruption insurance.
The Scope of Your Business Affects Your Business Interruption Insurance Costs
The cost of business interruption varies greatly depending on the scope of your company. If your company owns valuable commercial property, operates in a high-risk sector, or generates a lot of money, your business interruption cost will be higher. If you run a low-risk business on a smaller scale, the cost will be much lower.
The Nature of Your Business Makes a Difference
The industry of your business plays a role in determining how much business insurance costs you need to pay. If you operate a welding company, your risk of property destruction is higher since fire damage is far more likely to happen. Compared to an accounting firm, the welding business will have to pay more.
A Location Prone to Disasters Means Higher Costs of Business Interruption Insurance
The geographic location of your business matters. If your office, warehouse, or restaurant is located in an area where natural disasters or wildfires are frequent, you are at higher risk of property damage. Severe weather may also force your business to cease operations. Expect to pay more if you are based in an area prone to hurricanes and other extreme weather.
Commercial Property Value Affects Business Interruption Insurance Costs
When property damage renders your commercial property uninhabitable, business interruption insurance pays for rent or the expense of relocating. If you own or rent expensive commercial property, the costs for business interruption insurance will be greater, but so will your compensation if your company is forced to close.
Revenue Affects Business Interruption Insurance Costs
Businesses with larger revenue tend to pay higher premiums since business interruption insurance compensates them for revenue that is lost during a brief shutdown. Though they pay higher costs, they also receive higher compensation. Because your premium is calculated based on your estimated revenue, it will increase as your expected revenue grows.
Coverage Limits Affect Business Interruption Insurance Costs
If you want larger coverage limits on your business interruption insurance, you’ll have to pay a more expensive insurance premium. Generally, the wider your coverage, the more you need to pay.
While the cost of business interruption insurance may seem like a significant expense, it is important to remember that the costs associated with even a short period of closure can be significant. As such, business interruption insurance can be an invaluable investment for any business. In the unfortunate event that your business is forced to shut down because of a natural disaster, our public adjusters at Stone Claims Group can help you maximize your compensation. We will review your business interruption insurance policy to ensure you get paid fairly. Insurance adjusters work for insurance companies. We work for you (as public adjusters, fighting for fairness). Contact us to schedule a free claim review.