WAHM: Should Your Online Business Have Business Interruption Insurance?

Internet based businesses have exploded over the last ten years. More people have turned to the Internet to start their trade or have gravitated to online based business only. The Internet has provided everyone, including busy moms, with the opportunity to reach people from all over the world with their products and services, making it possible for all to have a successful company.

However, just because it is Internet based does not mean that you will not face many of the same problems as a brick and mortar establishment. There are many things that can prompt your business to be interrupted, and this interruption costs you sales and profit.

According to one Texas law firm, “Any storm, fire or other disastrous event that forces you to close down — even for a few weeks — can be catastrophic, as you can lose not only steady income but customer loyalty and key one-time opportunities.” If you have turned your side hobby into an online company, you should consider purchasing business interruption insurance in addition to your regular business policy.

A Quick Look At Business Interruption Insurance

Business interruption insurance provides you with a payment if your business is interrupted for more than a few days due to an unforeseeable event. In most cases, this is due to a natural occurrence, such as a powerful winter storm or a hurricane. This may also be used in the event of equipment failure and if the loss is due to something like fire or flood.

This insurance can make a significant difference in your income during this period of time. While you are recuperating from the event and putting your affairs back in order, the money will be there to cover your business expenses.

Business coverage only covers losses to inventory, equipment and damage to your warehouse or office. It does not cover lost sales. Interruption coverage covers what you have lost in sales. You will need to provide documentation showing sales for the last several months or year to make sure that you are reimbursed at the correct rate.

Policies range from $750 per year to over $10,000. Your policy will be based on your sales and growth levels. Work closely with your agent to make sure you have the right coverage. Purchase additional riders to make sure you have enough coverage. Some of the more common riders that are recommended are:

• Extra expense. If replacing inventory or your office will cost more than your coverage allows, this rider will cover the additional expenses.
• Contingent business. If your supplier is out of business due to a natural disaster, or your hosting company has succumbed to a fire, or any similar supply issue, this rider will cover the associated expenses and losses.
• Loss of utilities. Most insurance policies do not cover loss of utilities. However, as an Internet based business, you rely on electricity to conduct your work. If you are not sure this is an extra expense you want, just thin back to Hurricane Sandy and how that area was out of power for months.

You have worked very hard to build your Internet company. You may have even risked everything to launch your website because you “just knew” that it would be a success. So don't let anything stop you from being successful. Make sure that you have the right protection for your company by adding business interruption insurance to your business policy.

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