The nature of running a business is such that it is unpredictable with lots of different outcomes each day. Also, although you could read market indications and predict possible outcomes, you can’t exactly plan for civil unrest or disaster. Sadly, when these things happen, you lose money the more it stays unresolved. However, the best way to remedy these is by purchasing business interruption insurance. A business interruption in Nigeria basically compensates for any losses incurred that fall under the clauses of the policy.
What is business interruption insurance in Nigeria?
This is simply insurance that caters for the losses that follow after a business experience a disaster. Most times, the unrest would have to be serious enough to halt all operations, causing losses in the process. Business interruption insurance in Nigeria usually replaces the income lost during a disaster, e.g. natural or fire disaster. Also, business interruption insurance in Nigeria is mostly sold along with a larger policy, instead of as a standalone. It could come in something like a comprehensive package that includes property, or home insurance.
Also, business interruption insurance in Nigeria also caters for the operating expenses and funds a move to a temporal location if necessary. Furthermore, other things it could cover include taxes, payroll, and loan repayment. However, your policy would have to contain these clauses for it to cover them. A business interruption insurance in Nigeria is very flexible and can be designed to suit your taste. Also note that the more your policy coverage, the higher your premium.
What does business interruption insurance in Nigeria cover?
Although you can tailor your policy to what you want, business interruption insurance in Nigeria usually covers the following:
Profits:
business interruption insurance profit policy provides reimbursement for money that would have been earned had such interruption not occurred.
Fixed costs:
fixed costs represent the money spent for the smooth progression of your business. Therefore, it includes operating expenses and other additional costs of doing business.
Temporary location:
you can design your policy to cover the cost of temporarily moving and doing business in another location. In essence, this especially useful in times of extreme property damage that could render your original business location unusable.
Extra expenses:
business insurance for extra expenses simply provides financial compensation a little above fixed costs, therefore catering for any extras. Furthermore, it does this to allow the business to continue operation before standing back on its feet.
Commission and training cost:
some consequences of business interruption are the fact that a company might need to replace machine equipment and retrain new operators. Therefore, commission and training cost ensures that there is a smooth transition with no further expense incurred.
Civil authority declarations:
these are declarations that are beyond your power. A good example is a government imposed a curfew that forces your business to close earlier than it would, therefore making losses for that period. In reality, when such happened, business interruption insurance would provide compensation.
Other compensation provided by business interruption insurance in Nigeria include:
- Employee wages
- Taxes
- Loan payments
What does business interruption insurance in Nigeria not cover?
Business interruption insurance in Nigeria does not usually cover the following:
- Damaged items in the company building
- Damages from natural disasters like flood and earthquakes because they are covered by a separate policy
- Undocumented income
- Utility bills
- Pandemic, communicable diseases and viruses.
Conclusion
Business interruption insurance is a lifesaver against potential interruptions that would cost your business money. Therefore, due to the unpredictable nature of things, it is a good buy if halting your business even for a day could be costly.