Understanding Business Interruption Insurance:
This is probably the one risk area that is often overlooked and most likely to put a company out of business shold they suffer a loss that causes an interruption. Time and again we see examples of companies not understanding this coverage and not having the proper coverage at the time of a loss.
When business is interrupted by a disaster, business interruption insurance will help get it up and running again as soon as possible, but if your building is heavily damaged and your equipment and materials are gone, how do you do that? Your main concern is to keep your employees, keep your existing customers, and to maintain your excellent relationship with your suppliers.
Business Interruption Insurance is designed to replace the loss of business income and to help pay for at least a portion of the extra expenses which you encounter in restoring your business operations after a covered loss.
Business Income Coverage In a Business Interruption Policy:
This portion of the policy provides for the replacement of lost business income which would have been earned had their been no loss. Business income for insurance purposes is the net profit or loss of your business, before taxes. The replacement of ordinary operating expenses and payroll are also covered by this section of the policy.
Your business may be required to prove your claim by submitting business records, such as financial statements, income and expense reports or other business reports.
Extra Expense Coverage In a Business Interruption Policy:
In order to get your business up and running sooner, you may be required to pay extra for overtime hours or the extra cost of expediting equipment or inventory. The extra expenses which actually reduce the amount of a loss are covered by this section of the business interruption policy. If this coverage is desired, you may have to specifically ask for it, since it may not come already packaged in a standard policy.
Contingent Business Interruption Coverage:
Does the continued success of your business depend on the continued operation of another business? How would the operation of your business be affected if your key supplier experienced a devastating fire and was shut down for a few months? If the operation of your business is affected by a loss experienced by another business, you might have a claim for Contingent Business Interruption. Again, if you want this coverage, be sure and tell your business insurance agent.
Coverage Should Be Adequate:
When you buy Business Interruption Insurance you really need to take a close look at the business income and expense history of your business. Your coverage should be in an amount which is sufficient to pay for everything you need to continue business operations, including:
• Mortgage or Rent Payments
• Employee Salaries
• Equipment Lease Payments
• All other operating expenses
Don’t hesitate to contact UNICO about this very important coverage. Contact Carl Zeutzius at [email protected]