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Business Interruption Insurance in Portugal: Quick Guide

By Rauva

Published on 31 January 2024

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For any small business, preparing for unexpected disruptions is essential. Business Interruption Insurance is designed to protect companies from losses incurred if operations are temporarily halted.

This coverage is a vital tool for maintaining financial stability and resilience during unforeseen events that could otherwise cause significant setbacks.

This type of insurance provides a safety net, allowing businesses to recover from interruptions without the pressure of immediate financial strain. It covers lost income and helps manage expenses while the business is not operational, ensuring that a temporary pause doesn't lead to a permanent closure. Understanding the details of this insurance can be the difference between bouncing back and folding under pressure.

What is Business Interruption Insurance?

Business Interruption Insurance compensates businesses for lost income during periods when they cannot operate normally due to factors like natural disasters, equipment damage, or other unforeseeable events. Essentially, it bridges the income gap allowing businesses to continue meeting their financial obligations.

Does my Small Business in Portugal Need Business Interruption Insurance?

If your business relies on a physical location or specific equipment and an interruption can cause significant financial strain, then this insurance is crucial. It's suitable for retailers, manufacturers, service providers, and many more.

Benefits of Business Interruption Insurance:

  • **Income Continuity:** Ensure a steady income flow even when your business isn't operational.
  • **Cover Fixed Costs:** Tackle overheads, like rent and salaries, during the downtime.
  • **Aid Recovery:** Get support for relocation and repair costs to expedite the return to normal operations.

How to Obtain Business Interruption Insurance in Portugal:

1. Assess Potential Loss: Gauge the potential income loss from different disruption scenarios.

2. Engage with Experts: Collaborate with insurance professionals acquainted with the Portuguese business ecosystem.

3. Analyse Coverage Options: Get quotes from various providers to get the best coverage at a feasible rate.

4. Review Periodically: Adapt your policy regularly, aligning it with your business's growth and changing risks.

Linking to Other Business Insurance Types:

For a comprehensive perspective on the different types of business insurances available in Portugal, check out our guide on business insurance in Portugal.

FAQs on Business Interruption Insurance:

Is Business Interruption Insurance compulsory for Portuguese businesses?

No, it's not obligatory. However, considering the potential financial setbacks interruptions can cause, it's a wise investment.

How is the coverage amount determined?

Coverage is often based on the business's projected gross earnings and financial records, considering potential losses during the interruption.

Does this insurance cover pandemics or global health crises?

Coverage specifics vary. While traditional policies might not encompass pandemics, the recent global health scenarios have led to specialised coverages. Consult your policy or insurance agent for clarity.

How long does the coverage last during an interruption?

This varies by policy, but there's often a defined period, known as the "indemnity period," during which the insurer will compensate the business. Ensure this duration aligns with your business's potential recovery time.

Are there exclusions to what Business Interruption Insurance covers?

Yes, every policy will have exclusions. Common ones might include interruptions due to power outages or deliberate acts by the business owner. Thoroughly review your policy for a clear understanding.

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Written by Rauva

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Rauva is partnered with Swan who will be providing all payment services to Rauva clients. Rauva does not have access to client funds. Funds are kept in accounts provided by Swan, held in BNP Paribas. Swan is an EMI, based in France, supervised, and regulated by ACPR/Banque de France. Swan is authorized to carry out such services in Portugal and registered with Banco de Portugal under the registration number 7893.
Rauva is a certified accounting firm, but is not a certified legal services provider. As such, Rauva does not provide legal services. Rauva acts as an intermediary who facilitates the introduction to our customers of legal services partners who are legally registered and certified in Portugal. A list of Rauva’s partners can be found here.