It happens more than you would imagine, and the phone call is enough to make your heart race. An alarm has been triggered at your business and the firetrucks and police on their way.  Or a water main has broken, or a wind storm has done damage to the roof.Fire, Flood, Wind, all the things that insurance was designed to protect your business from. Once the disaster occurs, your insurance policy will kick into action and claims will be filed, remediation and restoration will commence.

  • But what happens when you cannot get your business back up and running quickly?
  • What if the situation is out of your control, and it will take weeks before you can open your doors and welcome clients and customers again?
  • How do you keep your staff members from departing, your bottom line solid, your bills paid and your business still floating (when depending on the source, 25% to 40% of all businesses that experience this kind of loss, close permanently?) 

BUSINESS INTERRUPTION INSURANCE: 

Business Interruption Insurance helps protect from your lost earnings in the event you cannot operate your business after a covered loss or if the loss causes a reduction in your earnings. This means if you lose income because of the disaster, you can typically recoup those losses minus the expenses you would have paid anyway, during a “period of restoration.”

Business interruption insurance:

  • Compensates for lost income if your company must vacate the premises due to disaster-related damage that is covered under your property insurance policy, such as a fire.
  • Covers the revenue you would have earned, based on your financial records, had the disaster not occurred.
  • The policy also covers operating expenses, like electricity, that continue even though business activities have come to a temporary halt.

 

A typical definition of "period of restoration" is the period that begins immediately after the direct physical loss and ends on the earlier of the date when the property should be repaired, rebuilt, or replaced with reasonable speed and similar quality, or the date when business is resumed at a new permanent location.

Business interruption coverage is not sold separately. It is added by your insurance agent to a property insurance policy or included in a package policy. But it is always a good idea to know the terms of your individual policy and check the policy to make sure that the coverage is exact. You do not want to fall short if a disaster should occur that temporarily closes your business.

I have known many instances in my career, that wildly successful, thriving businesses have shuttered their doors for months because of fire. Without this particular insurance coverage, they never would have survived, rebuilt and reopened to their waiting customers.


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