Nearly all businesses in New Hampshire would encounter financial hardship if forced to halt operations unexpectedly, especially mid-sized companies, which carry substantial operating costs that remain due regardless of activity. Business interruption insurance offers vital support in such situations.

Why Medium-Sized Businesses in New Hampshire Need Business Interruption Insurance

For smaller companies that qualify for a Business Owner's Policy (BOP), business interruption may be included in coverage. However, if your operation grows larger than what a BOP can cover, business interruption is not automatically included and must be added at a cost.

What is Business Interruption Coverage?

Business interruption coverage is also known as Business Income Coverage. The coverage is triggered if a specific event listed within the policy occurs, and your business is no longer able to generate revenue to cover certain expenses.

Expenses often include:

• Lost revenue
• Rent/mortgage payments
• Taxes
• Payroll
• Relocation costs

Common covered events include closure due to fire, theft, wind, hurricane, tornadoes, etc. To activate coverage, there must be direct physical damage to insured property, causing a suspension of operations and resulting in an actual loss to business income (and not just a slowdown).

Suppose a manufacturing company suffers a fire that damages a critical piece of equipment. Production must halt until the machinery is replaced—a process that may take weeks. During this downtime, business interruption insurance can help cover lost revenue, ongoing rent obligations, and employee wages. It's important to note, however, that policies typically include a waiting period of 48 to 72 hours before coverage begins.

The Devil is in The Details of Business Interruption Coverage

It is essential to understand what is and is not covered in a business interruption policy, as they can vary by insurance company and coverage enhancements.

For example, Contingent Business Interruption (CBI) may not be automatically included in business interruption coverage. CBI can provide coverage if a direct supplier or receiver of your business's goods or services suffers a direct physical loss. This is critical coverage if you rely on a specific supplier or receiver and don't have other avenues to continue business without them. If they suffer a loss, so would your business.

Service Interruption may or may not be included in a business interruption coverage. Service interruption extends loss of income if your business is not able to operate, if there is direct physical loss or damage to utilities such as electricity, gas, water, sewer, etc. If you can't operate without specific utilities, then you would want to ensure service interruption coverage is included.

What is Typically Not Included in Business Interruption Insurance?

Businesses face not just physical risks of fire and storms, but also cyber attacks. Cyber attacks can disrupt a business, but are not typically included in business interruption coverage. A separate cyber insurance policy would be needed.

Also not typically covered are the following:

• Pandemics
• Flood
• Earthquake (unless added)
• Delayed re-opening beyond the defined restoration period (typically 30 to 360 days, depending on the policy

With so many options available when selecting business interruption insurance, partnering with a knowledgeable insurance agent is essential. Experienced professionals—like those at HPM Insurance—can tailor a policy that aligns with your business’s specific needs.

4 reasons for business interruption insurance

While New Hampshire businesses of all sizes may benefit from these protections, they’re especially important for middle-market businesses.

1. Substantial operating expenses

To start with, middle-market businesses frequently have substantial operating expenses. Whether your business operates multiple locations, has a larger facility, or has quite a few employees, the costs of running a mid-sized business are often higher than those of a small business.

Many of these expenses have to be paid regardless of whether your business is running. Not making payments could result in additional fees, put employees in financial straits, and possibly even force you to close.

2. Limited financial reserves

Unlike large corporations with substantial cash reserves, middle-market businesses often don’t have the financial cushion to withstand prolonged revenue losses. There simply isn’t enough profit to build up significant cash reserves.

3. Rebuilding takes time

No matter what industry your medium-sized business is in, it’ll likely take longer to resume operations than it would for a small business. Middle-market businesses often have larger facilities, more complex equipment, and possibly multiple locations. Rebuilding all of this requires more time than simply rebuilding one storefront or restaurant.

The combination of lower cash reserves and longer recovery time could be highly problematic. Even if your business has the reserves necessary to stay afloat for a few weeks or months, you won't necessarily be generating revenue so quickly.

4. Opportunity costs of lost growth

The financial impact of a business closure often goes beyond immediate operational expenses, especially depending on the stage of your company. A delayed recovery can lead to missed growth opportunities, causing long-term setbacks.

While business interruption insurance doesn’t eliminate downtime, it can help accelerate your recovery. By minimizing financial strain, you can refocus on expansion and capitalize on future opportunities sooner.

Insure your New Hampshire business

If you're looking for business interruption insurance for your New Hampshire company, turn to the independent agents at HPM Insurance. With experience serving businesses of all sizes—particularly mid-sized firms—our team is equipped to help you find coverage that fits and protects your unique operations.