What is Business Interruption Insurance?

J.P. Gonzalez-Sirgo
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Founder of J.P. Gonzalez-Sirgo, P.A.

In the unfortunate event of a natural disaster or unexpected fire, financially savvy business owners plan ahead by purchasing a business interruption insurance policy. This type of insurance policy provides a financial safety net when an unforeseen disaster occurs leaving the business inoperable for a certain period of time. It provides this safety net by providing coverage based off profit prior to loss and if that information is not yet available then your insurer will look at a reasonable estimate of profit expectancies.

An American Law Report article written by William H. Danne, Jr. (37 A.L.R.5th 41) provides an excellent overview of business interruption insurance. He begins his introduction by explaining the main purpose of a business interruption policy. The purpose is to indemnify the insured against losses arising from the inability to continue normal functions of business. This includes various industries and commercial establishments as well. Danne Jr. explains what these costs during suspension of operations may typically look like such as fixed charges and continuing expenses stemming from the loss. However, these costs may not exceed the projected loss which may be estimated differently depending on your individualized policy. Certain policies may require a higher level of certainty when estimating costs or require their own adjuster to make calculations as to what is recoverable. The scope of your coverage will also be contingent upon which risks, or specified perils will be covered in the event of loss.

A common misconception is that the goal of business interruption insurance is to place the insured in a better position that they would have been if the disaster never occurred. However, that is not the case. Business interruption insurance is merely a protection against losses from an unexpected halt of operations. Business owners in most circumstances are still required to mitigate damages to the extent possible to have this form of coverage. If compliant with your policy, then coverage may extend to loss or damage to physical assets as the direct result of the perils named in your policy. In order to recover under a business interruption insurance policy there must be actual damage or loss of physical property.

It is important that you understand that not all business interruption insurance policies are alike. Some require more expedited notice or more concrete proof of loss. This is why each provision must be read with the entire policy in mind. 

You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at[email protected].

Sources:

- 37 A.L.R.5th 41

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