As a business owner, you likely have insurance coverage for your business equipment and property. But, have you thought about what you would do if an unexpected event stopped you from operating your business? How long will you need to close and what type of income loss is possible? In this instance, you might want to consider business income coverage.
Business income coverage can help protect your business during an unforeseen circumstance. The following are two potential scenarios that illustrate how this product can provide important protection.
Scenario 1: Your company’s property is hit by a windstorm
Imagine your company’s property is damaged by violent winds. Water seeps through the roof, you lose electricity and damages are extensive. A generator allows you to resume operations while the power is down. The policy you purchased includes a “utility services” endorsement with power supply coverage.
Your insurance company is also paying for business income loss during the “period of restoration,” provided you had to close the office to repair the damages. The policy also includes coverage for “extended business income,” which typically ends on whichever date is sooner: the date you resume business operations to a level that generates pre-loss business income or 60 consecutive days after the date of direct physical loss or damage.
Scenario 2: Your business is robbed
Imagine that you own a small restaurant and it’s robbed on a Saturday night. Employees and customers are locked in a cooler while thieves empty the cash drawer. The computer that operates the register and customer ordering system is broken. You can’t get a new computer until Monday morning, so your business remains closed until then.
Your policy includes an “open perils business income coverage form (without extra expense)” and the “extended business income” option. As a result, your insurance company pays for the business income loss for the balance of Saturday night and all day Sunday. However, your business experiences a decrease in business the week after the robbery, as patrons were hesitant and fearful to return to your business after the event. This resulted in additional lost income that is also paid for by the insurance company.
All of the conditions that are typically required to qualify for “covered extended business income” are included in this case. That’s because the business was suspended due to a direct physical loss or damage to the computer ordering system.
What coverage is important for my business?
Extended business income coverage can be tailored to your specific business needs, taking into account your revenues and seasonal income fluctuations. For a more complete understanding of what your policy should include, talk with your insurance broker. We can give you peace of mind, knowing if an unexpected event takes place, the company you worked so hard to build will be protected.