Business interruption coverage basically protect business owner in terms of
Loss of income/Loss of profit – The policy will cover the loss of profit or income from the affected business due to damage of fixed assets. For example the damage from fire or burglary.
Scenario: Ahmad’s factory has caught on fire, The building, and machinery
Ahmad’s factory has caught on fire, The building and machinery are totally damaged.Ahmad has policies to cover the building and the machinery. In order to set up a new factory, Ahmad needs
at least 5 months to complete the whole process. During this period of time, ahmad will be losing the source of income and profit. Business Interruption policy will protect Ahmad by providing potential
income/profit that Ahmad would lose during the rebuilding of the factory.
Increased Cost of Working – The policy will cover any potential increase cost of anything during the rebuilding process. for example extra rent for a temporary place to run an operation.
It would be really important for business owner to include business interruption policy because the period of recovering may take a while and you don’t want
to get into a financial problem during the recovery period.