Tom's Blog
Working hard to establish your business is your focus as a business owner, but what if something happens to your big investment resulting in a shut down of your business? Are you prepared for this situation if it happens to YOU? Disasters can happen in a split second so you must protect your long-term success with business interruption coverage.
Will the Doors of Your Business Remain Open if This Happens to You?
Business interruption coverage is an endorsement that may be added to your existing commercial property insurance policy that provides protection for loss of business income that occurs when there is an interruption in normal business operations due to a covered, direct loss to the business.
Imagine that you receive notification from the fire department in the middle of the night that your business is under a fiery siege. Panic sets in when you think of what may happen to the future of your business. Without this endorsement for business income coverage, your business may end up having to close the doors forever.
It’s bad enough to suffer a situation like this one, however, with the business income coverage endorsement, you can rest assured that you can continue to service your customers, continue with payroll for your employees, and continue your business operations even if at a different, temporary location until your business is restored. Having this endorsement could mean the difference in whether the doors of your business remain open or shut.
Basic Elements of Business Income Coverage Include, but Not Limited to:
- Loss of Business Income- This is the net income (including payroll) that results from the suspension of business operations as a result of a covered loss.
- Extra Expense- These are extra expenses that are incurred to allow for the business operations to continue, such as advertising fees, relocation expenses, or rental costs for another building.
- Period of Restoration- This is the time period that the insurer is obligated to pay for the loss business income and is defined as the reasonable period of time it takes to repair, rebuild, or replace the covered property that sustained the damages. The period of restoration begins at the time the loss occurs and ends when the business is back up and running, as long as it is within a reasonable time period.
Some Basic Steps to Take When a Loss Happens
- Take a detailed inventory of the damaged property.
- Keep all records/receipts of any extra expenses incurred starting from the time of the loss.
- Provide documentation of income/sales/payroll for the inspection by the adjuster.
- Close out the books prior to the loss and begin new documentation of your business operations starting at time of loss.
- Protect your undamaged inventory from destruction and keep the entire destroyed/damaged inventory for the adjuster to inspect.
Having this business interruption coverage won’t prevent losses from happening but will certainly help you pick up the pieces following a loss. The main goal is to keep your business operating as normally as possible while continuing to service your customers. This type of coverage can provide the foundation of a successful business recovery and allow your business to be up and running in no time.
