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4 Things to Consider for Interruption Insurance

  • Adroit Insurance and Risk
  • August 24, 2015

As we said in our last blog post, business interruption insurance provides much needed peace of mind for business owners facing unforeseeable roadblocks.

We absolutely recommend taking up interruption cover for your business and when you do, here are 4 things to consider with your risk adviser to get the best possible cover.

1. Does your business rely on precious stock that is difficult to immediately replace?

  • Some stock is not particularly easy to obtain and in the event of a disruption, how quickly could you find an alternative source and satisfy your customers’ demand?

2. Do you have sufficient cash reserves to fund a lengthy stint ‘on the sidelines’?

  • You’ll have to excuse the footy analogy. But seriously, the worst thing about having your business’ trading halted is the uncertainty. You often don’t know when you will be back in action. You could be forced to borrow from family or friends, take out an additional bank loan or use up personal savings, so repayments and interest need to be considered. Can you afford to fund a period of inactivity?

3. Are your employees vital to your business’ future and how hard would it be to replace them?

  • Any self-respecting business owner acknowledges the value and importance of their staff in terms of the business as a whole. But the issue here is how would the interruption of your business affect your staff? Would they ride it out with you? If they were forced to leave, how efficiently could you hire and train a replacement?

4. Would you be liable for contractual fines if you were unable to supply or accept delivery of stock?

  • Most businesses have relationships with other businesses that supply their capital. In the vast majority of cases, these relationships are enforceable contracts that, if breached, can result in penalties. Does your business have such relationships?  Would you be liable for fines if disaster struck and your business wasn’t in a position to fulfil your obligations?

Keep in mind; this list is by no means exhaustive. The best approach to comprehensive business interruption insurance is sit down with your risk adviser and let them guide you through the cover.

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