Since 1953, Maryland has been impacted by eight hurricanes and one tornado that caused damage that was significant enough for the state to be declared a federal disaster area. When weather-related disasters or structure fires affect businesses, these companies often need to remain closed for several weeks while repairs are made.
Forced closures can be especially hard on small businesses since they usually don’t have a lot to fall back on. Fortunately, you can get coverage against this risk by purchasing business interruption insurance. Talk to an independent insurance agent near you for help finding a suitable policy.
What Is Business Interruption Insurance?
Business interruption insurance, which is sometimes called “business income insurance,” is designed to provide your company with a continuation of income during the times it is forced to temporarily close for repairs following a covered event like a fire or a severe storm.
In some cases, this insurance can also cover closures that are the result of civil authority, such as if the government mandates that the road leading to your business remain closed for an extended time.
How Much Does Business Interruption Insurance Cost in Maryland?
Prices for business interruption insurance can vary from one company to the next. This is because costs are calculated according to a few factors such as the following.
- The type of business you own and the industry in which you operate
- The weather risks in the ZIP code where your company is located
- Your company’s previous and expected annual revenues
- Your company’s average regular monthly expenses
In general, small businesses tend to spend between $500 and $1,500 a year for their coverage, while larger companies pay significantly more.
What Does Business Interruption Insurance Cover in Maryland?
Businesses in Maryland may be forced to close temporarily due to damage caused by covered events like accidental fires, hurricanes, tropical storms, windstorms, electrical storms, and tornadoes.
This insurance can replace the expected revenues your business would have made if it been able to remain open. This enables your company to continue paying regular expenses such as the following.
- Mortgage or rent payments for the place where your business is housed
- Loan payments if your business owes on any commercial loans
- Employee salaries and wages
- Extra expenses incurred because of the closure, such as if you need to rent temporary storage workspaces while your business is being repaired
- Relocation costs if the damage necessitate you to permanently move your business operations to a new location
- Training costs if you need to train your employees how to use newly purchased equipment and machinery before you can reopen
- Business tax payments due during the closure so that your company is not hit with penalties and late fees
Business interruption insurance can also reimburse your company for lost profits. The amount of compensation will typically be based on the average profits earned by your company in the months just prior to the incident.
Talk to an independent insurance agent in Maryland to learn more about what business interruption insurance can do for your company.
What Is Not Covered by Business Interruption Insurance in Maryland?
As with all insurance policies, business interruption insurance has some coverage exclusions. Your policy will not cover the following.
- Broken or damaged property: This is covered by your commercial property insurance.
- Closures due to flood damage: Unfortunately, business interruption insurance only covers damaging events that are covered by your commercial property insurance, and floods are almost always excluded.
- Unreported income: If income is not documented in your company’s official financial records, you should not expect to be compensated for not receiving it during your forced closure.
- Utilities: Utilities are typically excluded from your coverage because your business will not be using them at the same level it does during normal business operations.
- Communicable diseases: In 2020, when the COVID-19 pandemic forced many businesses to shut down, business owners in Maryland and the rest of the country were dismayed to learn that closures due to diseases are not covered.
Learn more about what your business interruption insurance can and cannot cover by talking to an independent insurance agent with an office near you.
What Is the Indemnity Period for Business Interruption Insurance?
Your policy’s indemnity period refers to the length of time that benefits will be payable by your business interruption insurance following a covered event.
The indemnity period typically starts on the date that the covered disaster occurs and ends when your business is brought back to the same condition it was in prior to the damage.
Some business interruption insurance policies require a waiting period of two or three business days before coverage can begin. This means that for minor damages that can be fixed in a matter of a couple of days, coverage may never kick in.
A standard business interruption insurance policy will provide your business with up to 30 days of coverage, but most insurance companies will allow you to purchase endorsements that can extend this coverage for up to one year.
What Is Contingent Business Interruption Insurance?
Contingent business interruption insurance (CBI) is very similar to business interruption insurance, but it works a little differently. Instead of covering business income losses that result because of disasters that impact your business, it covers against indirect losses caused by disasters that impact third parties that your business relies on for revenue.
For instance, if you own a manufacturing plant and one of the vendors you rely on for production materials is temporarily shut down due to damage caused by a fire, this can force your business to have to temporarily halt operations if you are unable to find an alternate vendor quickly.
A local independent agent can help you determine whether contingent business interruption insurance is a good fit for your Maryland business.
How Can You Find the Best Business Interruption Insurance in Maryland?
When you are in the market for business interruption insurance, a local independent agent can help. These experienced insurance professionals are available to explain your various options, answer your insurance-related questions, and provide you with a variety of customized quotes that you can review together.
There are more than 200 independent agents in Maryland. Contact an insurance agent near you to discover how easy it can be to find the best and most affordable coverage for your business.
TrustedChoice.com Article | Reviewed by Jeffrey Green
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