Business Income Insurance

Are You Covered in Case of a Business Interruption?

If a fire caused your business to temporarily close, what would you do? Ideally, you would move to a temporary location while your permanent place of business was being repaired. While the fire damage to your property would be repaired by your Property Insurance policy, Property Insurance does not automatically cover the loss of income or extra expenses you might incur as a result of the fire. Business Interruption Insurance, also known as Business Income coverage, will provide coverage for these exposures.

What is included in a Business Interruption Insurance Policy?

• Compensation for lost income for up to a year (or more) if you have to close or vacate your premises as a result of damage covered by your Property Insurance policy.
• Reimbursement of the net profit that you would have been earned had the disaster not occurred.
• Payment of continuing operating expenses, such as a mortgage, that must be paid even though your business is temporarily closed.

Considerations for Business Interruption Insurance

• Business Interruption Insurance can only be purchased as part of a Property Insurance or Business Owner’s policy.
• Policy limits should be sufficient to cover a reasonable time to rebuild your permanent business space.
• Generally there is a 72-hour waiting period before coverage applies but some carriers that we have contracts with offer no time constraints on their waiting periods.
• The price of coverage depends on the risk of disaster to the premises. This may depend on the business location, nature of the business and how easily the business could function at an alternate location on a temporary basis.

What is Extra Expense Insurance?

Extra Expense Insurance is another valuable addition to a Property Insurance policy. This additional coverage provides funds to cover additional (or extra) amounts incurred to run your business as a result of a covered loss. Depending on your loss, Extra Expense Insurance may be sufficient to provide financial relief without having to utilize Business Interruption Insurance.

Insurance experts agree that Business Interruption Insurance is the most valuable additional Property Insurance coverage available. Yet, it is often overlooked by business owners. Since Property Insurance only covers the cost of physical loss or damage to buildings and contents in the event of a disaster, Business Interruption coverage provides coverage vital to maintain cash flow while your permanent business location is being repaired.