When a large-scale incident occurs, it can impact your business for many months, often years afterwards. Buildings and contents insurance will cover the cost of physical damage but this will not cover the consequential financial impact of an event.
For example, if a restaurant suffers a fire that renders the premises unusable the business will have to cover the cost of:
- The reduction in income while repairs are undertaken at the premises
- Ongoing costs while unable to trade e.g. mortgage repayments
- Staff wages or the cost of recruiting new staff once reopened
- Marketing costs to relaunch the business
- Loss of trade to competitors – if a company is closed for a substantial length of time, even the most loyal of customers will look elsewhere. The reduction in income can be seen for months after trading has commenced again.
Business Interruption looks beyond the immediate risk an event poses and instead looks at the longer-term impact on your business. Policies can also be extended to cover:
- Incidents that are not caused by material damage at your premises but still prohibit access
- Damage occurring at a supplier's premises – if you rely heavily on a single supplier for goods that are not readily available elsewhere then it can impact your business.
- Damage occurring at a customer’s premises – if the majority of your business is transacted with a single customer and they are unable to trade following a major incident it will impact your overall income.
- Loss of Attraction – certain incidents can cause a reduction of footfall in the following months. Even when your business is not directly involved, it can still impact your income.