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Here’s why you need business income coverage

June 9, 2015

How would you manage if a fire or natural disaster ravaged your business, forcing you to close your doors for months?

Do you have protection to ensure your employees and loyal customers don’t desert you while your property is being restored?

Business Income Coverage can make the difference between your company’s survival or going out of business during a difficult time.

Standard Coverage

Business income coverage can provide you with an income to keep your business going should there be a fire, flood, earthquake, or other disaster. It can also give you money for payroll and to pay the  bills. But coverage may be limited in some circumstances, as it was for businesses in the World Trade Towers after they came down.

Coverage will also include money to relocate and set up shop elsewhere while your property is being repaired. This includes machines and other equipment that you will need to be in business again. The payment will be made for the net amount, and is not intended to put the business owner in a better condition than before the disaster.

Duration of Payment

Business income coverage will typically be limited in duration. This will often be for 30 consecutive days, but may extend to 90. There is also apt to be a limit as to when the money will be paid, often less than 12 months after the loss.

It Pays for Extra Expenses

When disaster strikes, businesses often encounter extra costs. This may include paying more for shipping, or buying temporary equipment, and other things needed to keep your business running. If necessary, it may even pay for more expensive equipment than what your company had originally.

Utility Services

A business may experience a shutdown if the utility services in the area are malfunctioning and basic services are interrupted. Coverage is available for that problem too if it results in a loss of income. For example, if a civil authority limits access to your business because of a natural disaster, you will be covered.

Dependent Property

Businesses often depend on other ones to maintain their daily operations. The insurance company will also pay if there is another company that you depend on to provide you with customers, and it closes or cannot help you anymore.

Types of Coverage

When a business buys a business interruption coverage policy, the amount to be repaid, and the terms are agreed upon beforehand. These are usually called “valued” or “value” policies. “Open” policies require the business owner to provide proof of the costs before it is reimbursed. It will also be necessary to prove loss of income in either type of policy. This means that a broken machine, no matter how large, will not be covered unless there is an actual loss.

 It’s important to understand the coverage you NEED and what your current policy offers – remember, every insurance carrier is different!

Founders Insurance Group can help you select the right business income coverage to protect your business during a difficult time. Give me a call at 860-482-3506 or drop me an email  mgreco@foundersgrp.com

Mark Greco

Commercial Lines Account Executive

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