Have you ever watched a big storm or witnessed an accident on the news that you hope would never happen to you and your business? The truth is you never know when a natural disaster or accident will hit. If it does, is your bottom line covered?
Business income coverage (also known as business interruption coverage), is protection against loss of income or profits. This coverage protects businesses if they have suffered a property loss or damage from a covered liability.
If you have a covered property loss and your business is forced to close temporarily business income coverage can help you:
- • Replace lost net income
- • Pay for continuing expenses like a mortgagee
- • Taxes and even your payroll
- • Pay for relocation expenses and advertising fees if you set up shop at a temporary site
It is important to note that events such as fire, wind, hail, vandalism, and damages from cars or aircraft are typically covered under a business insurance policy. However, flood, earthquakes and glass breakage is typically not covered in a loss of income insurance policy.
Business income coverage is intended to cover and compensate business owners for lost income during a period of restoration. This period begins when the damage occurs and usually concludes when the damage to the property is restored or repaired. The standard policy extends this coverage for 30 days.
Determining the amount of coverage is the tricky part. Typically, the insurer will require business owners to show past, current and projected profit as well as losses sustained. Meaning that the business income protection would be entered into a mathematical formula to determine the maximum indemnity period.
While business owners can’t predict when a disaster will strike, they can prepare. Businesses should prepare a disaster and recovery plan that outlines a plan in the event of a disaster or substantial accident. Additionally, business managers and owners should keep detailed and accurate records – this will allow your insurance company to provide adequate coverage in the event of loss of income.
The Dowd Insurance Agencies can help you protect your business and your employees who work with you. Our professionals can review your policy and help add business coverage insurance. We will spend time carefully examining your insurance needs and develop a plan that is customized and responsive to your specific business – contact us today.