How can businesses ensure their income continues in the face of a disaster? Simple… make sure Business Income Insurance is included in their policy, and that the limit provided is adequate.
It's been estimated that over 25% of business fail to reopen after a major loss because they neglected to insure the income vital to their continued operations. In fact, many businesses are unaware that insurance is available to protect their income in the event of a covered loss. This type of insurance is referred to as business income coverage.
Business income coverage protects against the loss of income a business suffers when a covered loss causes damage to the insured premises. The loss doesn't have to cause the business to shutdown entirely. Even a covered loss that causes the business to slowdown can be covered with business income coverage.
Tip. The business income form follows the property policy, which means in order for coverage to respond to your loss of business income, the loss must be covered on your property policy. Make sure you review your business income loss exposures with your professional agent so you have the protection you need.
When reviewing the different options for your business, you should know there are two primary business income forms available:
Business Income with Extra Expense: Many times after a loss occurs, businesses incur numerous extra expenses to return their operations to normal. With this form, the additional expenses (cost to rent a temporary facility until your building is repaired, for example) can be covered.
Business Income without Extra Expense: With this form, no extra expense coverage is provided.
Many businesses know they need to cover their property with insurance to replace physical property. But most fail to see the significance of their business coming to a halt after a loss. Fortunately, insurance is available to answer the need for continued income while operations are restored to pre-loss conditions.
Tip. Every business should consider some form of loss of income insurance. Discuss this with your agent! It may be the most overlooked form of protection that you can't afford to ignore.