Businesses come in many forms, from partnerships, start-ups, to corporations. Also, they can suffer an interruption in many ways. If you are a business owner, you should be aware of all possible causes of business interruption and insurance options you should obtain on time. The most common reasons include disputes among the owners, cash flow and disputes with other parties (customers and vendors). But, it is not all. We bring you a list of causes of business interruption and reasons why you should get insurance and hire professional insurance claims adjuster immediately after you start a business.
Top 5 causes of business interruption
There are many causes of business interruption, but the most common we should talk about are:
- Fire, explosion (44 percent)
- natural catastrophes, water damage (43 percent)
- supplier failure/lean processes (33 percent)
- cyber incidents (29 percent)
- machinery breakdown (29 percent).
Besides these top 5, there are few more:
- Loss of electricity or running water
- Equipment failure
- Supply chain disruptions
- Crime or vandalism
Almost every business at some point faces with some of these risks. So, you must think and make a strategy in which events are the biggest threat to your company and then take the preventive measures to protect your business from them. When you know all your biggest enemies and greatest threats you are ready to make the best strategy.
Tips to reduce the risks of suffering a business interruption
When you know your biggest business threats, you should start making a plan on how to protect your company from the loss.
- Install sprinkler systems to protect your office space from fire damage.
- Make sure to have regular maintaining of machinery to prevent unexpected breaks.
- Build a supply chain; you don’t want your business to be dependent on one vendor.
- Buy security cameras and alarms against burglars and vandals.
- If there are few owners of the business, make sure to sign proper agreements that will include all the rights and responsibilities of the owners. This will be helpful if one owner doesn’t want to be the owner
- Control the cash flow to avoid interruptions
And remember, in all cases and business projects you must have agreements and contracts that will help you avoid disputes that can interrupt the operation of your company.
Weather Conditions as a big threat to your business
In some states on the north, the winter can be devastating to many companies and their business flow. A snowstorm sometimes causes shut down of public transportation, power outage, and your ability to reach your customers. The same thing can happen if you are living for example in Florida where the business interruption can be caused by hurricanes and storms. In Florida, business owners usually need help to file a business interruption insurance claims, which is the sign that many of them are dealing with different causes of business interruption.
What about Acts of Terrorism?
Terrorism is devasting for everyone, including many businesses around the world. There is no worse thing than losing a life, but terrorism also can cause massive business interruptions. Because of the terrorism, sometimes the whole cities need to be shut down, and people cannot fly, commute, drive or work.
Cybercrime – as the most popular cause of business interruption today!
Cybercrime is a very dangerous thing for many companies today. Many business owners find it very difficult to fight with it. Cyber attacks can cause severe damages in the company and to interrupt the business flow. Even they can lead to severe financial loss. Sometimes it is tough to prevent all potential cyber attacks, but you can take some steps to protect your business from shut down. It is crucial for you to remember that your organization needs the right insurance – it can play a leading role in successful risk management efforts.
How can a cyber attack cause a business interruption?
Hackers can easily find the weakness in a business computer system, through many hacking methods. Cyber attacks can:
- Make your website unusable
- Make your website inaccessible to employees and customers
- Put Viruses, worms or other code that deletes essential information on a
business’ hard drives and other hardware
We all know that today every business rely on computers. So, there is a big chance to be a victim of a cyber attack. So, don’t think just about water damages, fires and other business interruptions as most common. Today, the most significant threats are hackers that can cost you a lot, even the whole business.
What is business interruption insurance and why you need it?
Business interruption insurance is one of the most critical insurance you should purchase if you are a business owner. It is a type of insurance that covers the loss in case your business suffers a disaster. When you are purchasing the business interruption insurance, it is essential to take the same insurance denial countermeasures, so you don’t have to deal with it at the same time while your business is interrupted. You want to be sure your business loss is covered in case of break-ins, floods or fires. And be aware, if your company doesn’t have this type of insurance you are risking that business interruption can lead to a business termination.