Most business owners have a Commercial Property policy to cover their building and/or contents if they were to suffer a loss, such as fire, lightning, wind, or hail. However, many business owners are not aware that there is insurance to replace loss of income and other expenses during the temporary closure.
After a disaster, it takes time to repair or rebuild the building you occupy, especially if the disaster was widespread (i.e. hurricane or other natural disaster). That’s where Business Income coverage comes into play. Business Income insurance covers the actual loss of income your business sustains due to suspension of your business operations as a result of damage or destruction to your property by a covered cause of loss (i.e. fire, wind). The policy covers loss of net income and continuing normal operating expenses during the loss, including payroll costs.
Business Income coverage can be added to your current Commercial Property policy eliminating the need for an additional policy. Choosing a proper limit requires an analysis of your financial statements and should involve your accountant and insurance agent. If you make any rental income from a property you should also consider the loss of rental income as well. For smaller businesses, some policies may pay out the actual loss sustained up to a certain period of time (typically 6 or 12 months).
Policies usually have a 24 to 72-hour deductible. This deductible eliminates claims from small losses and encourages business owners to take prompt action to repair or mitigate losses.
Another valuable coverage that is often sold in conjunction with Business Income is Extra Expense insurance. Extra Expense insurance covers expenses above and beyond normal operating costs that help your business return to normal operations. Common examples of expenses paid are increased rents for a temporary location, marketing expenses, and shipping costs.
Business Income and Extra Expense are coverages that all businesses should have. Without this coverage your business could suffer loss of income, employees, and customers following a property loss.
We encourage you to talk with our Commercial Lines team to find out more about Business Income and Extra Expense coverage and to help you uncover the exposures you face as a business owner.
For more information on how Cyber Liability can protect your business, please contact Brian Ford, CPCU at BFord@InsuranceResourcesLLC.com or 727-345-0242.