In a study done by the Federal Emergency Management Agency (FEMA), it was found that 40% of businesses will fail to reopen after a disaster, and 25% will fail within one year. And whether you own a restaurant or a dentist’s office, sometimes there are occurrences that will cause you to temporarily have to close your business.
These closures might be due to a personal holiday, giving your employees a temporary break, legal reasons, a crisis or even disaster. Whatever the reason for your temporary shut down, during any substantial amount of downtime, you will still need to hold insurance for temporary closed businesses to cover you with the right amount of protection should disaster strike.
During times of closing your business, you may deal with challenges. These challenges can include a lack of cash flow to pay employee’s wages, utilities or even your rent or mortgage.
Weather is one of the main reasons businesses may need to temporarily shut their doors. Depending where your business is located, it may be subject to viscous storms that can damage your building, and in an event such as this, insurance can help cover the cost of repairs.
Further, if your business is closed or vacant for a substantial amount of time, then there is an increased risk of theft or vandalism. Businesses contain a lot of valuable information and products. Stolen money or property can leave your company in shambles, and business insurance policies can help cover these costs.
There are a few different types of insurance that would be helpful to hold during a period of temporary business closure. That being said, one of the most important aspects of coverage to have secured during a temporary business closure is Crime insurance protection of some kind.
When purchasing a Business Owner’s Policy (BOP), you insure protection for all major assets on the property as well as for all liability risks. This type of insurance includes all of the basic coverages that a business owner needs, including Crime insurance and anything you require to properly run a business.
Often included in a BOP is Business Interruption insurance. This is very helpful when it comes to temporary business closure. All other expenses related to closure will be reimbursed including revenue. For example, if your restaurant needs to close for a few months to renovate after a break-in that includes vandalism, your BOP will cover you.
One great aspect of a business owner policy is that it bundles together several coverages at a lower premium than the total cost of the individual coverages sold separately. This can save you money in the long run, should you choose to take this bundled insurance option.
Commercial Property insurance covers the building of your business and its contents. It will cover furnishings, fixtures, computers, other equipment and inventory in the event of:
It is important to be aware that Commercial Property insurance does NOT cover:
If not already included in your BOP, then you should make sure you have Commercial Crime insurance. This insurance will cover not only your property, but also your merchandise, cash, and securities against theft and even embezzlement or forgery by employees.
Included in Commercial Crime insurance is robbery and theft insurance. This will protect your business from employees and any non-employees that commit theft or robbery. Commercial Crime Insurance will also cover your business if you experience a burglary while your business is closed.
You should always review your policy to ensure that this clause is included and adhered to if your property is closed. Some of these clauses might include a warranty that requires inspections of the property before the closing period. An Unoccupied Premises Warranty can be for long-term vacancies or for specific periods of time that the property is vacant.
In the case that you need to store items away from your business and, more specifically, off of your business’s property, you may decide to store items at home. You want your property protected no matter where it is stored. If you decide to store products at home, you will need homeowners insurance to protect your goods.
When looking for an insurance policy, you want to make sure you are protected in the case of most major events. This means that you should be covered for an interruption in your business, or a temporary business closure, which is essentially insurance for inactive businesses.
You can look to reduce your premium by adjusting your coverage to the things you value most, whether that is your property, operating costs or employee coverage. Every business is different and so is the insurance that they need. If you are unsure as to what type of coverage is necessary for your business, feel free to speak with an experienced advisor from CoverWallet today for more information.
In 2018, the largest Commercial insurance in the United States paid out $17,580,086 in claims. That means that without insurance, scores of businesses would have been liable for these costs. Not only might you be liable for costs, but you also run the risk of losing your business. Make the smart decision of purchasing business insurance, even while temporarily closed, to ensure that your business is protected.
When temporarily closing your business, you may run into a number of challenges. You may run into short-term cash flow challenges, issues with employees, or even problems with investors or stakeholders. Certain steps need to be taken to accommodate these issues before your business temporarily closes.
Creating a closure checklist beforehand is the best way to ensure that everything is in order before your business closes its doors.
The most important step in combating challenges during a temporary closure is to consult with your insurance company. Do not wait to obtain coverage as there may be time limits. As long as you have taken the necessary steps beforehand to secure a business insurance policy that covers your business while closed, then you should have no trouble when you look to reopen.
Temporary closures can happen for a variety of reasons, and as unfortunate as it is, many of these reasons we cannot control. It is important to have an insurance policy in place ahead of time to be prepared for these types of situations.
Just because your doors are closed does not necessarily translate to business being done. Nowadays, a wide variety of businesses can operate online (with the proper insurance in place) while the physical store location is shut down for the time it needs.
At CoverWallet, we have your best insurance interests at heart. Protect your business no matter what with a business insurance policy. If you have any doubts, speak with a professional and tailor an insurance policy that is custom-fit to your business needs.