Forced Closure Coverage

Don’t Let Disaster Strike! Get the Coverage You Need with Forced Closure Insurance

Business owners have likely heard of “forced closure coverage” — an insurance policy designed to protect businesses from losses due to forced closures due to a virus outbreak or other public health orders. This type of coverage is becoming increasingly important as businesses face the continuing challenges of COVID-19 and other health-related risks.

Forced closure coverage can provide small business owners with much needed financial protection if their operations are required to be shut down or significantly curtailed by a government ordered stay-at-home order, pandemic, natural disaster, or other catastrophic event. This type of insurance helps cover any losses resulting from reduced revenue, employee related costs (such as wages), inventory costs and more.

It is important that small business owners understand all the components of their forced closure plan so they can make informed decisions when purchasing insurance. One key component is the scope of coverage – what conditions and events are covered? Generally speaking, most policies include coverage for both direct physical damage (such as vandalism) and indirect physical damage (such as a loss in business income). Some policies may also provide additional benefits such as payment for lost wages caused by layoffs due to the event, no fault cancellation reimbursement and more. 

Another important factor when considering such insurance is determining what level of deductible applies — this will affect how much the policy will pay out in the event of a claim. It pays to ask questions like “Does the organization have enough resources on hand to cover large deductibles if needed?” 

Finally, it’s essential for businesses to research what happens when there’s an interruption in service due to a natural Disaster or pandemic — does the policy cover business expenses incurred during long duration shutdowns? Are there additional riders available for certain types of events that may not be included in standard policies? Knowing these answers ahead of time can help ease uncertainty during times of crisis. 

Regardless of what your specific needs are, it’s worth taking some time to evaluate whether forced closure coverage makes sense for your business. With rising costs associated with healthcare and disruption from events like pandemics, natural disasters or terrorism attacks — planning accordingly could save you money in the end. The right force closure policy can offer peace of mind knowing you’re better protected should events take place beyond your control.