Continuity is crucial in business, and there are few things that are more important than continuous revenue and cash flow, especially for small to medium-sized organizations. In fact, just a short break can be extremely costly for an organization, which can often lead to serious liability damages or long-term closures.
This is where insurance cancellation insurance can help. This form of coverage provides protection against a variety of common disruptions, including natural disasters, equipment damage and vandalism. The following are some other great benefits of insurance cancellation insurance.
- Revenue. In the event of a disruption, insurance cancellation insurance provides coverage for income that your business would have earned during a closure period if it had functioned normally.
- Rental or leasing fees. Even if your premises are unusable after a disaster or other event, many rents still require you to pay. Insurance cancellation insurance allows you to continue making rent or lease payments, even if your business does not work.
- Relocation. If your primary location is unusable after a disaster or other event, you will probably need to relocate to stay open and continue to generate revenue. Insurance cancellation insurance can cover the costs of moving your business to a temporary location and can include both moving and rental costs.
- Wages for employees. If you are unable to work, it is likely that you will not be able to continue paying employees. Business break insurance can help you avoid losing staff while you are closed by making sure you make a living. This is especially important, as finding new employees is often more expensive than retaining them.
- loan payments. If you have an outstanding loan, you must continue to pay even if your business is not fully operational. Insurance cancellation insurance will ensure that you never miss a payment until you are up and running again.
Company: A small, family-owned bagel shop.
The Challenge: Following a recent fire, a bagel shop suffered major property damage. Not only were significant repairs needed, the company lost crucial baking equipment.
Repairs to the damaged property and equipment were expected to take three months ̵
Insurance interruption insurance in Action: After a covered disruption, insurance interruption insurance can help companies of all sizes to stay afloat and recover quickly. This is because business interruption insurance can replace income organizations that would have received if they could have operated.
This was especially important for the bagel shop, as paying for costly repairs and not having a stable income stream could have bankrupted the company. With the right policies, organizations can take the necessary steps to get started again, all without sacrificing daily income.
Company: A medium-sized car dealer.
The challenge: After a night of severe flooding, a number of area companies experienced significant water damage. Of these companies, one car dealer was hit the hardest and lost most of its inventory.
In addition, as the party was flooded, the dealership had to relocate its operations to a new location. This in turn meant that the dealership agreement had to sign a new lease and cover steep variable expenses.
Insurance interruption insurance in action: In the event of a disaster or other disturbance, organizations may be forced to relocate in order to remain open. Without proper policy, organizations would have to pay for these costs out of pocket.
Thankfully, business interruption insurance can reimburse organizations for all costs associated with a relocation.
Insurance cancellation insurance is designed to give companies access to the assets they need when they need it most. However, these policies can be complex, and it is important that you work with a licensed insurance adviser when seeking coverage. Contact CoverLink today for more information.