There are currently more than 400,000 small businesses operating in South Carolina, and any business that is bringing in a cash flow knows that revenue comes to a halt if you have to temporarily close your doors. That's why it's important to have South Carolina business insurance and specifically, business interruption insurance can be a lifesaver if you are forced to shut down operations but still have payroll and business expenses to pay.

This add-on policy is not necessary for every business, but big or small, if your business is at risk of having to unexpectedly close your doors, it's worth knowing more about. Depending on where your business is located in South Carolina, business interruption insurance might make more sense for you than other businesses. A South Carolina independent insurance agent can help you understand what this policy offers, whether your business can benefit from it, and help you find the best rates. 

What Is Business Interruption Insurance in South Carolina?

For businesses in South Carolina, business interruption insurance provides protection if your business has to shut down operations for any period of time due to certain circumstances. If the cause of the closure is a covered loss under your business interruption insurance, then the policy will pay for things like lost wages, loss of income, and other business-related expenses.

If you purchase your business interruption policy as part of a business owners policy (BOP), it will be bundled with other coverages such as commercial property insurance and general liability insurance, and will only cover events outlined in these underlying policies.

What Does Business Interruption Insurance Cover in South Carolina?

There are a variety of ways that your business could have to temporarily shut down operations. Whether it's damage from a natural disaster such as fire,  hail, or a windstorm, or if you're the victim of vandalism or equipment damage, all of these events would be covered under a business interruption policy. Specifically, it will help reimburse you for the following financial losses.

• Income: Any profits that would have been earned during the time you were closed or shut down.
• Payroll: Provides the ability to continue to pay employees even if they're unable to work because of operations being shut down.
• Fixed expenses: Any fixed operating costs that are still being incurred even if you're not open, such as rent or a mortgage.
• Temporary location change: If you need to find a new location to temporarily run your business out of, some policies will cover the costs of the relocation.
• Taxes:  Whether you pay monthly or quarterly, it will cover the cost of taxes you would have been charged during the time frame in normal operations.
• Training costs: If you need to train employees on how to use new machinery or equipment after recovered losses.
• Extra expenses: Any additional expenses that the insurance company deems reasonable and necessary for the business to continue operation while being repaired.

How Does Business Interruption Insurance Work in SC?

If your business goes through a covered event and experiences financial loss, you'll be able to access the benefits of your business interruption policy for a certain amount of time. This time frame is referred to as a "period of restoration" and generally runs from the date when you had to shut down your business operations to when you are back up and running at the same capacity as prior to the interruption.  The time frame will vary by policy, but in your policy terms, you'll be provided with a specific period of recovery. 

During this time you'll need to provide proof of financial losses, previous month revenue, payroll numbers, tax returns, and other profit and loss statements. The amount of benefit you receive will be based on your financial records, so it's important to keep your records up to date.

What Business Interruption Insurance Exclusions Exist in South Carolina?

Any perils that are not listed in the business interruption policy will not be covered. This will vary by policy, but some of the most common exclusions include:

• Broken items: This includes glass or furniture.
• Flood and earthquake damage: In all business policies, flood and earthquake coverage are a separate policy.
• Closure from a damaged power line: If a power line is struck by lightning and crashes into your property, it will most likely not be covered by your business interruption policy.
• Undocumented income: Any income that you cannot prove has been being paid for several months will most likely not be covered.
• Utilities: If your business isn't open, it is assumed that your utilities are not on, and therefore they are not typically covered.

Currently, across the United States, closures related to COVID-19 are excluded in business interruption policies. South Carolina is one of several states that has introduced a measure that would require insurance companies to include COVID-19-related losses in business interruption insurance coverage. The bill is currently being reviewed.

What Are Business Interruption Insurance Costs in South Carolina?

The cost of your business interruption policy will depend on how much you purchase, the industry you're in, how many employees you have, and the amount of coverage you need. While your independent insurance agent can help you determine how much coverage is good for your business, it's important to keep in mind that South Carolina is no stranger to hurricanes. Over the years the state has suffered immense damage from hurricanes. In 2015, when the state experienced Hurricane Joaquin and the 1,000-Year Storm, it resulted in more than $2 billion in damage. Businesses that are located along the coast are more likely to experience hurricane damage, and therefore may require more business interruption coverage than businesses located inland.

Business Income Insurance vs. Business Interruption Insurance in South Carolina

Business interruption insurance and business income insurance are the same policies and offer the same benefits. Some insurance companies refer to the coverage as business income or business interruption, but the benefits and coverages are the same. 

What Is South Carolina's Contingent Business Interruption Insurance?

Contingent business interruption insurance is designed to provide coverage if your business loses income or has to cease operation because of a third party that is a key part of your revenue. This can include suppliers, buyers, providers, and drivers. During COVID-19, many businesses have lost significant income because of the effect that the pandemic has had on global supply chains and sales. If your business experiences extreme revenue loss or damages as a result of third-party dependents, contingent business interruption provides insurance coverage. 

Why Work with an Independent Insurance Agent in South Carolina?

Since South Carolina has a history of natural disaster damage, it's important to work with an insurance professional that understands the potential risks and perils your business faces. South Carolina insurance agents are experts in the field of insurance and business interruption insurance in the state. They can shop for different quotes and companies and provide you with a policy package that fits your needs.

They're also not just there in the beginning. In the unfortunate event that your business is affected by a covered peril, your independent insurance agent can help walk you through the claim process so you're cash flow is back at full capacity as soon as possible.