What would you do?
Your commercial property insurance policy would pay to repair and replace everything. But how would you run your business in the days, weeks or months until your office is good as new? Hopefully, you would have had a business interruption policy in place to help you stay in business while you rebuild your location. That raises the question:
What exactly is business interruption insurance?
Simply put, business interruption insurance, or business income insurance, covers your loss of income when a disaster strikes. In our opening story above, your business income policy would help replace lost income and defray the costs of setting up a temporary location to run your business from.
What does business income insurance cover?
Here are some of the things typically covered under a business interruption insurance policy:
- Profits: Any profits that would have been earned if you were running business as usual. These are determined by your previous months financial statements.
- Fixed Costs: This covers any normal operating expenses like rent, electric bills, etc that are still occurring at the property.
- Extra Expenses: Sometimes extra expenses (beyond your fixed costs) arise that no one planned for. If these are required to run your business and are considered reasonable by the insurance company than they will be paid.
- Temporary Location: Talk to your agent about having the costs of setting up and moving to, and working from, a temporary location.
- Commission & Training Cost: Here is one you might not think of. What if your old machinery is replaced with machinery that your employees don't know how to operate. This covers any training required to educate your workers to do their jobs.
- Civil Authority Ingress/ Egress: Just suppose the government closed down your street so you couldn't enter your office. Your business would be covered under this event.
How much business income coverage do I need?
This depends on the kind of business you have and the size of your business as well. As you can imagine, a plumber that works out of a rented garage space will require very different coverage than a manufacturer that occupies 1,000,000 sq feet of floor space.
Here are a few questions to discuss with your business insurance agent:
- How much is your monthly overhead cost?
- How much would it cost to get a temporary location to operate from?
- What natural disasters is your area prone to?
- In the event of a disaster how long could it take to get you back to business as normal? It could take anywhere from 30 days to several months.
- Does your existing building have functional fire sprinklers?
Who needs a business interruption coverage?
It comes down to this: if you run a business, then you need to protect your back. Accidents and disasters happen. Doesn't it make sense to insure that money keeps rolling in even though your business location isn't up and running yet?
How to get a free business interruption insurance quote
We offer a complimentary insurance consultation. We will take the time to understand your business, clients and specific industry related liabilities and challenges. Contact us today at (877) 341-5728 to schedule your free, no strings attached, business interruption insurance consultation today.