Don't Forget Business Interruption Insurance
By Kristi Vaughan
As you go about planning for disaster prevention and disaster recovery, don't overlook the very real possibility that a disaster could deprive you of income, for at least a period of time. What will you do then? And how will you pay for the new expense of opening up a temporary location?
Just as important as the insurance that covers your buildings and their contents is insurance that cover loss of income and the extra expenses that often are incurred in recovering from a disaster. This insurance is called business interruption insurance.
What is covered?
According to the Insurance Information Institute, business interruption insurance typically covers income lost because your business cannot operate due to damage caused by a disaster covered under your property insurance.
Business interruption insurance also can cover operating expenses that continue even though your business is not functioning. These might include utilities as well as the salaries and benefits of key workers.
The amount of coverage is determined by your policy limits and by your businesses history of earnings. The length of time the coverage lasts also is predetermined by the policy. When purchasing a policy carefully consider how long it will take to rebuild your business, including time needed to obtain permits and, if applicable, find new tenants for a rebuilt building.
How do I get it?
Business interruption insurance cannot be purchased on its own. It is additional coverage that is added to a property insurance policy.
What does it cost?
The cost of business interruption insurance depends on risk factors and the ease of quickly reopening the business. Ask your insurance agent if you can save money by purchasing business interruption insurance as part of a package policy.
What is extra expense insurance?
Extra expense insurance covers those costs needed to operate a business following a disaster that are in excess of normal operating expenses. If your business is easily relocated and it is unlikely you will lose income as the result of a disaster this may be all that you need. Check with your insurer to see if you can buy extra expense insurance without purchasing business interruption insurance