WHAT EXACTLY IS BUSINESS INTERRUPTION INSURANCE?
Business interruption insurance, also called business income insurance, is meant to ensure your business’ loss of income—specifically, the loss of income resulting from a covered cause of loss due to direct physical damage to a covered property. A claim can also be triggered in the event of denied access to your business by civil authority, such as hurricane damage to surrounding areas.
WHAT IS EXTRA EXPENSE COVERAGE?
In the event of a covered claim, businesses often sustain losses that go far beyond lost sales or lost rental income. For example, expenses such as the rental of a temporary location, the overtime and bonuses paid to get your business back up and running quickly. These are extra expenses that your business would not have normally incurred but now has to pay in order to support normal day-to-day operations. So, check your business income coverage form for this important coverage for extra expenses.
HOW MUCH BUSINESS INTERRUPTION COVERAGE DO I NEED?
While there is no perfect science, business income worksheets can be a great tool for both you and your insurer. These worksheets analyze your business’s gross sales, recurring expenses and the trends from year to year, as well as an estimation of the potential downtime your business might face depending on the type of claim.
WHAT IF MY BUSINESS IS DEPENDENT ON OTHER OPERATIONS OR VENDORS?
Many businesses are reliant on their suppliers, a significant customer or in the case of a retail establishment, an anchor store. In these situations, it is highly possible for your business to sustain no “direct physical damage” but experience a major loss of income claim due to a supplier, customer or dependent property being down. Contingent business Interruption insurance can provide protection from such losses.
While we hope that your business never has to utilize this coverage, don’t let the threat of a business interruption be a hindrance to your business’s progress. Use it for the unique security that it can provide you in the face of challenges.
MEET THE EXPERT
Alexander H. Carothers, III, CIC has worked with corporate insurance products for the past 15 years and became a shareholder of HDB in 2009. He would like to hear from you, so reach out at 334-517-1821 or
acarothers@hdbinsurance.com.
