Examine the definition of fixed expenditures in business insurance.
Having business insurance is the best way to bring more security to your business. The basic coverage of this service already has excellent protection in cases of fire, short circuits and explosions.
However, it is still possible to expand this service and bring even more protection and comfort to the corporate environment. Covering fixed expenses in business insurance is an excellent option to ensure the organization’s operations.
In this text, we will explain in more detail what fixed expense coverage is and how it works. Check it out!
What are fixed expenses in business insurance?
First of all, we will explain what fixed expenses are in business insurance so that you understand their real importance.
We know that every organization needs the maximum possible protection for its assets to prevent potential accidents from compromising its operations and causing financial losses to the business.
Therefore, taking out business insurance is the best solution to prevent this type of scenario from being so damaging and to bring more peace of mind to the routine of companies. In this way, coverage of fixed expenses appears as an additional feature to complement the efficiency of this service, offering even more benefits to policyholders.
It works as an extra service and includes a series of fixed amounts in case certain losses prevent the company from meeting its financial obligations. Thus, the coverage of fixed expenses in business insurance certainly creates a more favorable environment for growth, favoring the company’s expansion towards success.
What are the fixed expenses?
The main characteristic of fixed expenses is precisely their periodicity. They are not called that for nothing. Therefore, these amounts are not directly linked to the company’s production or impacted by the organization’s performance. Although they may undergo some type of variation in certain periods, it is certain that they will always appear on the agreed date.
When we talk about fixed expenses, it is very common to think only about the basics necessary for the company to function, such as employee salaries and rent for the organization’s facilities. However, there are several other costs that fall into this category.
As a result, additional costs like those for insurance, telephone, condominium, payroll, internet, energy, water, and gas bills, among others, can be reimbursed by this coverage. It is crucial to stress that these costs are incurred irrespective of the company’s performance.
Therefore, having coverage provides an extra guarantee that the company will be able to honor its commitments if an accident prevents the organization from paying these expenses on time. Check out a complete list of the fixed expenses covered:
- employee salaries: social and labor charges;
- bills: water, gas, condominium, telephone, internet, electricity;
- location and property taxes;
- leasing of machinery and equipment;
- board of directors’ fees.
How does fixed expense coverage work?
Now that you understand more about fixed expense coverage in business insurance, let’s explain how this service works. First, you need to identify the situations in which you can file a claim and receive reimbursement for the policy you have taken out.
There are different scenarios that allow this service to be activated, ranging from fires to tornadoes. Check out the full list:
- fire;
- lightning strikes;
- explosions;
- electrical damage;
- gales;
- tornadoes;
- cyclones;
- hail;
- riots.
When a claim is filed, the company enters the indemnity period — the time required for business activities to return to normal. This period coincides with the date of the incident and ends immediately after the organization resumes its normal routine — and may also occur if the maximum period defined in the insurance policy is exceeded.
During this period, the insured may receive compensation for their fixed expenses and ensure the company’s operation during crises covered by business insurance.
Business insurance
As we have shown throughout this text, this service provides a huge layer of asset protection to companies, making it possible to overcome a crisis without compromising the company’s finances. Precaution is the best solution to overcome the unpredictable obstacles on the journey towards success for organizations.
As a result, fixed expenditure insurance is viewed as an extra service to the advantages that come with company insurance already. It was created as a remedy to provide further security and protection for the integrity of organizations, going beyond the most popular policies available.
Try to identify the risks that the company is exposed to and evaluate the benefits that this service can bring. The purchase of optional coverage should be carefully considered to ensure the protection of the organization’s assets and ensure an intelligent contract for the enterprise.
Combining the best of business insurance with an extra layer of protection, fixed expense coverage is an excellent way to protect yourself. This way, if a claim is triggered, you will be able to protect yourself against possible financial losses that could destabilize the company’s operations and compromise its cash flow.
What does fixed expense coverage not cover?
After elucidating the nature of this service and its potential advantages for your enterprise, we have compiled a special section to allay any uncertainties you might have regarding the benefits of this coverage. To prevent unpleasant shocks in the future, it is important to be aware that certain losses are not recoupable.
These consist of the net and gross earnings made by the business at the time the claim was made. We also have the business turnover, which is the total of the sales proceeds from goods and services that have not yet been reimbursed to your company.
