Article Reviewed by a licensed insurance professional: Sam Meenasian (CA dept of insurance license #0F75955).
Estimated reading time: 6 minutes
It’s hard to remember how connected we all are to the internet these days. That is, until your internet goes out and you can’t use your point-of-sale system or access customer records. There are very few things these days that aren’t at least partially handled online, no matter what kind of business you own or operate within.
A long-term internet outage can happen because of a storm, construction in your area, or carrier disruptions you can’t control. Even a couple of hours without internet access could mean lost income. Imagine being without coverage for days at a time.
Business owners should always be prepared to answer whether they could afford to be without internet for an extended period.
Why an Internet Outage Can Be So Painful
Over the past ten years, the internet has become part of everything, from your phones to your point-of-sale kiosks to any devices that you use in your business. You won’t be able to process payments, run payroll, update client records, manage supply chain needs, or even schedule your business.
Downtime costs vary dramatically by industry, size, and how dependent your operations are on online systems. Survey-based studies of larger organizations have found that high-impact outages could reach seven figures per hour, but many small businesses experience lower—yet still business-threatening—losses. Use your own revenue, payroll, and operating-cost data to estimate your true exposure.
A multi-day outage could destabilize your business financially, especially with tight cash flow, high payroll obligations, or heavy reliance on online payments and cloud applications.
The Domino Effect
Outages are so expensive because they’re just one part of a series of unfortunate issues that can cost businesses heaps of money. When the internet goes out, the first day you can probably track company work and customer interactions by hand. However, as the outage stretches out, you may struggle to run payroll, generate invoices, ensure customers can pay their bills, and manage inventory.
You can only wing it for so long before things start to be unsustainable.
Prolonged outages have caused significant revenue loss. In some extreme situations, that disruption contributed to business failure, particularly where liquidity was limited and recovery costs were high.
Outages are more common as the internet becomes complex. Single points of failure such as on-premises network equipment (modems/routers/firewalls), ISP/core carrier disruptions, DNS or routing issues could cause significant financial destruction to your company.
Many businesses rely on cloud applications for POS, accounting, scheduling, and file storage. That reliance can increase outage impact without offline procedures and cached data.
Survey-Based Estimated Outage Costs
| Business Type | Estimated Weekly Loss (Revenue + Labor + Downtime) |
| Retail Store (POS + e-commerce) | $15,000 – $35,000 |
| Construction / Field Service | $12,000 – $25,000 |
| Restaurant / Café | $10,000 – $30,000 |
| Manufacturing (production halt) | $50,000 – $100,000 |
| Professional Services / Office | $7,000 – $20,000 |
Recovery costs aren’t included in these totals, so this is just a baseline for your minimum outage-related costs.
Insurance Protections that Business Owners Neglect
Because many companies don’t understand these risks, they may lack the business insurance coverage they need to survive an outage. Having Business Income and Extra Expense coverage through a BOP/commercial property policy helps you cover direct physical loss or damage from a covered cause of loss that forces a suspension of operations (subject to policy terms and any waiting period).
Cyber insurance may include business interruption coverage, but terms vary significantly by carrier. Some policies limit BI to security events, some include ‘system failure,’ and many require separate dependent/contingent business interruption for outages at cloud or technology vendors. Waiting periods, sublimits, and vendor-definition requirements are common. Check with your insurance provider about access to both policies, just in case the worst happens. Being able to move your daily operations to a location with internet could save your business and your company’s reputation. Financial assistance during a cyberattack can also mean the difference between saving your business and having to hang up your hat.
How Long Can Your Company Operate Offline?
This is an important question to ask yourself. Can you operate at all offline? Are you prepared to take orders by hand, to handle payments offline, and to manage payroll without payroll software?
If you cannot answer yes to these questions, then you need to think long and hard about how you are protecting your business from this kind of threat. Also consider the funds aspect of this problem, and confirm you have the “slush fund” cash you need to make temporary choices to keep things going even when the internet is out.
How Does Business Interruption Coverage Work?
Business Income / Extra Expense coverage may help replace lost business income and certain continuing expenses when a covered loss suspends operations, but triggers and exclusions vary.
Business Income coverage may include a waiting period before coverage begins, and it applies during the defined restoration period; both vary by policy.
Consider an offline-mode plan your business can use if you experience an internet outage.
This plan should include a backup source of internet, local copies of critical documents and information shares and team training for when this kind of business emergency crops up. Communicate with your customers as soon as the downtime exceeds what you’d expect from a standard outage.
Keep cash on hand and have manual payment options in place. Make sure your team knows how to operate these items and track payments in this environment.
Also, reach out to your insurance company and confirm you have the protections you need if an outage lasts more than a few hours. Dual internet providers might eventually be the norm, but for now, consider that you are fully protected from the damages that a significant internet outage might cause to your company.
Things to Remember
Make sure that you think about the real cost of an internet downtime. It’s not just being offline for a few days. It’s lost income, a damaged reputation, and lost clients. Make sure you have an offline plan and redundancy for essential company processes. Preparation prevents panic and makes thriving during an outage much easier.
Be sure that you have the right insurance coverage to keep your business on track even when the internet isn’t performing as it should. Our team can help you verify you have the coverage you need to survive a long-term internet outage and come out the other side without significant damage.
