Business interruption due to terrorism attack – are you prepared?

By Higginbotham on March 06 , 2015

Business interruption insurance

The terrorist attacks of September 11, 2001, and the Boston Marathon bombing in April 2013 were life-changing events – not only for those directly involved, but for an entire nation. They shattered our collective sense of security and instilled a new sense of vulnerability in all of us.

Those events have also raised awareness among business owners about the growing threat from terrorist attacks. While these attacks have been rare on U.S. soil, you don’t have to dig very deep into any day’s news coverage to see the growing turmoil around the world. And it’s no secret that many terrorist organizations have the desire to attack U.S. targets. The recent threat to target the Mall of America in Minneapolis, MN, is the latest proof of that.

Is your business financially prepared for an extended disruption in the event of a terrorist attack?

The average business owners don’t think twice about protecting their building, equipment, and products with the right insurance. But have you taken appropriate measures to insure your loss of income in the event of a disaster such as a terrorist attack?

Your facility could be severely damaged and have to be vacated for an extended period of time for repairs. Would you have the financial means to absorb the loss of income? Even if your business doesn’t suffer any property damage, injuries or fatalities, your business could still end up on the casualty list. In the aftermath of the Boston Marathon attacks, law enforcement agencies conducted a lengthy investigation of the area, cordoning off six city blocks for days. Every business within that six-block area was affected by a loss of traffic, sales and income. And of course, the devastation in the area of the World Trade Center on 9/11 was many magnitudes greater, affecting hundreds of businesses.

That’s why you need to be prepared with business interruption insurance. This coverage compensates you for:

  • Profits you would have earned if the disaster hadn’t happened
  • Fixed costs such as utilities and other regular operating expenses incurred during recovery
  • Relocation costs of moving your operations to a temporary location
  • Reasonable extra costs above your fixed costs that allow you to continue operating during recovery

Basically, business interruption (BI) coverage is designed to put your business back in the same financial position it would have been in had the disaster never happened. If the unthinkable should happen, BI insurance provides a lifeline that can make the difference between staying in business and closing up shop permanently.

Don’t assume you’re covered.

Your standard general liability, property and other business insurance policies will cover loss or damage to your facility, equipment and inventory – but they won’t cover lost profits if your business can’t operate.

While you can’t get BI insurance as a separate policy, it can easily be added to your commercial property policy or included as part of a business owner’s policy. You should also consider extra expense insurance, which will reimburse you for a reasonable amount that you spend – beyond your normal operating expenses – to avoid having to shut down while your business recovers and rebuilds. Business interruption typically provides coverage for financial losses incurred if your organization is required to suspend operation due to direct damage related to terrorism, or if civil authorities prevent access to the area in which you conduct business, after an attack occurs. Of course, every policy is different so ask your agent for details about how your coverage works.

The threat is real – and growing.

Business interruption risks are one of the top concerns for risk managers in 2015, according to the fourth annual Allianz Risk Barometer published by Allianz Global Corporate & Specialty S.E. And that means business interruption insurance is more crucial than ever.

For more information, contact the business insurance experts at Higginbotham Insurance. With our thorough risk assessment and custom tailored coverage, you’ll have the peace of mind of knowing that if the unthinkable happens, you’ll be able to stay on course.

Tags: Business Insurance