What is Business Interruption Insurance

Business Interruption Insurance
Business interruption insurance covers lost income and expenses resulting from property damage or loss. For example, if a fire forces you to close your doors for two months, this insurance would reimburse you for salaries, taxes, rents, and net profits that would have been earned during the two-month period.

Business interruption insurance protects a business owner against losses resulting from a temporary shutdown because of fire or other insured peril. Generally, business interruption insurance provides reimbursement for lost net profits and necessary continuing expenses.

Business interruption insurance can be as vital to your survival as a business as fire insurance. Most people would never consider opening a business without buying insurance to cover damage due to fire and windstorms. But too many small businessowners fail to think about how they would manage if a fire or other disaster damaged their business premises so that they were temporarily unusable. Business interruption coverage is not sold separately. It is added to a property insurance policy or included in a package policy.
 

A business that has to close down completely while the premises are being repaired may lose out to competitors. A quick resumption of business after a disaster is essential.

• Business interruption insurance compensates you for lost income if your company has to vacate the premises due to disaster-related damage that is covered under your property insurance policy, such as a fire. Business interruption insurance covers the profits you would have earned, based on your financial records, had the disaster not occurred. The policy also covers operating expenses, like electricity, that continue even though business activities have come to a temporary halt.
• Make sure the policy limits are sufficient to cover your company for more than a few days. After a major disaster, it can take more time than many people anticipate getting the business back on track. There is generally a 48-hour waiting period before business interruption coverage kicks in.
• The price of the policy is related to the risk of a fire or other disaster damaging your premises. All other things being equal, the price would probably be higher for a restaurant than a real estate agency, for example, because of the greater risk of fire. Also, a real estate agency can more easily operate out of another location.

Extra Expense Insurance

Extra expense insurance reimburses your company for a reasonable sum of money that it spends, over and above normal operating expenses, to avoid having to shut down during the restoration period. Usually, extra expenses will be paid if they help to decrease business interruption costs. In some instances, extra expense insurance alone may provide sufficient coverage, without the purchase of business interruption insurance.

Taking precautions before an accident can help to keep insurance rates down. Following are steps businesses can take to lower the chance of a liability insurance claim:

Set a high standard for product quality control.

Make sure all company records are complete and up-to-date.

Be sure employees are properly trained.

Check with your insurance company to see what safety steps they recommend for your particular business.

If you have insurance questions please call Les Robinson at 1-800-836-2040 or e-mail at lrobinson@thenorthwoodscorp.com

For a quote on Commercial Insurance call Les Robinson at 1-800-836-2040 ext. 3014 or go to website at  http://www.wnyinsurance-quote.com/html/quotes.html

Lester J. Robinson III, FICF, CC

Insurance Broker

The Northwoods Corp.

8810 Main Street

Williamsville, NY 14221

Phone: (716) 626-0004 Ext. 3014

Fax: (716) 626-5057  Att: Les

lrobinson@thenorthwoodscorp.com

See “the ABC’s of Insurance” TV show on Time Warner Cable Channel 20 in Western New York hosted by: Les Robinson