If you run a machine shop you have a lot of different risk factors to consider. Since your specialty is based on your equipment, having the right insurance in place is crucial. You might get by with basic insurance coverage, but this will leave you open to major risks. According to the Insurance Institute for Business & Home Safety, at least 25 per cent of businesses that close due to a disaster do not reopen – don’t let your machine shop be part of this statistic. One of the most effective ways to protect your machine shop is with business interruption coverage.

Coverage When You Need It the Most

Created by the manufacturing industry, business interruption insurance has evolved over time into an essential risk tool for all industries. With business interruption coverage, you can collect income you would have expected to generate if it were not for the unexpected event. When your machine shop is shut down because of a damaging event like a fire or storm you lose revenue. Business interruption coverage protects your gross profit and helps you pay for ongoing costs until your machine shop is back up running and generating the same profit as it was before the major event that shut down your operations.

There are many choices when it comes to business interruption coverage and which one you choose will depend on the needs for your machine shop. For example, a small manufacturer may require different coverage than a large operation. Some things to consider include:

• How long would it take to get your business up and running after a serious event?
• If you rent, how well protected is your building?
• How likely is it that a covered loss will occur?
• Are sprinkler systems up-to-date and functional?
• Is comparable commercial space readily available in your area, or would it take weeks to find another suitable location?

You may also want to think about the likely period of time you expect to need to restore your business after a loss. This "restoration period" determines how much profit you might lose and can vary greatly depending on the severity of the loss your business experiences. For example, a small fire may require only a 30-day restoration period, while a major regional event like a tornado may require months.

Be Prepared for the Unexpected

Shopping for insurance can be time consuming and confusing with all the coverage terms and numbers. Start by talking to a broker experienced in manufacturing insurance to learn more about what type of insurance you would benefit from in general and business interruption insurance in particular. A broker will translate complex insurance language for you and help you with the right insurance plan that works for you, including:

• Identifying and analyzing loss exposures;
• Examining risk management plans;
• Selecting the right insurance program;
• Implementing your risk management plan;
• Monitoring results;
• Risk management program revision.

A broker will walk you through the various options available in designing the coverage. Understanding business interruption insurance for manufacturers is essential for your day-to-day business. Contact a broker to explore your options especially when it comes to business interruption coverage for machine shops.