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What business interruption insurance does not cover

Like other retail establishments across the country, most located here in Orange County take as many steps as possible to avoid losses that could have an adverse effect on operations. Since there are many events that retailers cannot plan for, they do the next best thing and purchase insurance policies to cover losses associated with them. One policy many companies have is business interruption insurance, which is designed to cover a variety of expenses and lost revenue under certain conditions.

However, there are things that this insurance does not cover. For instance, if a business suffers property damage, this is not the policy under which to file a claim. This policy will not cover the losses of materials such as equipment, inventory and other items. It will cover any revenue losses while the business cannot operate due to the property damage.

If another company sustains a loss that affects an Orange County company's ability to function, business interruption insurance will not cover those losses. It will also not cover extra expenses not associated with the normal course of business. However, riders may be available to cover these issues.

Business interruption insurance does not cover revenue losses not associated with property losses. In order for this policy to come into play, the business must sustain some damage to the property and/or location. As a rule of thumb, if a company is not filing a claim under its property insurance, this policy will not allow a claim. Understanding what this insurance can and cannot do for a business may help in making plans for when the unusual happens.

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