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How Can Business Interruption Insurance Save Your Business?

Posted by David Ross on Sun, Dec 29, 2019

Business_Interruption_Insurance (2)Do you have Business Interruption coverage for your business? No? Let me ask you this… What would you do if there was a fire in your building, and you were forced to shut down while repairs were made?

If your business is shut down, you probably won’t have customers. If you don’t have customers, you probably won’t have any income to pay yourself or your employees. According to FEMA, nearly 40% of small businesses never reopen following a disaster.

That’s where Business Interruption Insurance can help.

What is Business Interruption Insurance?

Business Interruption Insurance (Aka Business Income) is typically an endorsement that can be added to most Commercial Property Insurance policies. It protects your business income that is a direct result of a loss, damage, or destruction of your property that is covered by your Commercial Property Insurance.

Additional Coverage to Consider

Extended Period of Indemnity

Some policies include a 30-day extension beyond the standard period of restoration; however, you may need more than the 30-day extension. Sometimes, it takes a while to get a business up and running following an extended closure. Therefore, you may want to consider buying an extended period of indemnity option endorsement, which increases that 30-day extension in multiples of 30, up to 720 days.

Extra Expense Coverage

If your property is damaged, you may incur additional expenses to keep your business running. Those expenses could include the cost of moving to a temporary site, leasing equipment, paying overtime, etc. Extra Expense coverage pays for expenses that are above and beyond your normal operating costs but are required to keep your business running after your property is damaged.

Service Interruption Coverage

One in four companies experience a power outage at least once a month, according to Bloom Energy, and it’s estimated to be costing the U.S. economy $150 billion annually.

If a utility company – such as electrical, gas, water, telephone, etc. – experiences damage to a property that is not on your premises but causes an interruption in your business operations, or an actual financial loss, Service Interruption Coverage may kick in.

Contingent Business Interruption (CBI)

CBI covers your business income loss that is a result of loss, damage, or destruction of properties owned by suppliers of goods and services that you need to run your business. The damage must be the type of damage that your Commercial Property Insurance policy covers.

Leader Property Endorsement

This endorsement helps protect your business if an off-premises facility within a certain distance of your property incurs property damage that affects your business. This endorsement is good for restaurants that rely on the customers coming from another venue, such as a casino, stadium, or amusement park.

Interruption by Civil or Military Authority

If a civil or military authority denies you access to your property, this type of policy may cover lost business sustained during the time you are denied access. This type of thing can happen during a hurricane, winter storm, flood, etc.

 

How to Save Big on Business Interruption Insurance

Sometimes it’s hard to think of every risk that your business may face, and insurance policy verbiage can be complicated. This is why an experienced insurance agent is vital if you want to understand your risks and options and protect your business.

The independent agents at American Insuring Group specialize in Commercial Insurance. They can not only ensure that you have the right coverage they can also ensure that you pay the lowest price for that coverage by shopping among many competing providers for you. Give us a call at (800) 947-1270 or (610) 775-3848 or connect with us online.

 

Tags: Restaurant Insurance, Commercial Insurance, commercial property insurance, Utility Service Interruption Insurance, Business Interruption Insurance

Major Disaster? Have Business Interruption Insurance?

Posted by David Ross on Mon, Mar 28, 2016

Sobering Statistics on Business Interruption Insurance

Business-Interruption-Insurance-350.jpgA recent national survey of small businesses yielded some sobering statistics. It found that 66 percent of these businesses do not have business interruption insurance—even though an estimated 25 percent of them will not be able to reopen following a major loss, such as a fire, a break-in, or a storm.

That same survey also revealed that three out of four small business owners do not have a disaster recovery plan, yet more than half of them admit that it would take at least three months for them to recover from a disaster.

 

Most small business owners are at risk of disaster, but they are least likely to have disaster recovery insurance or a plan in place to help them recover. About a third of the owners say it is not important for their business to have a disaster recovery plan, and they give interruption insurance a low priority.

Business interruption insurance can be as vital as fire insurance

It’s unlikely that anyone would ever consider opening a business without buying insurance to cover damages from fire or windstorms. But many small business owners don’t give serious consideration to how they would survive if a fire or other disaster damaged their business premises and rendered them temporarily unusable. A business that has to close down completely while their buildings are being restored may lose out to competitors. A quick resumption of business after a disaster is essential.

A few key points about business interruption insurance

  • Business interruption coverage is not sold separately but is added to a property insurance policy or included in a package policy. 
  • It 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.
  • Business interruption insurance covers the revenue you would have earned, based on your financial records, had the disaster not occurred.
  • The policy also covers any operating expenses that continue even though your business activities have temporarily stopped.
  • The price of the policy is related to the risk of a fire or other disaster damaging your premises.

 

A disaster could halt your business—even if your property remains undamaged

You have purchased a standard loss of business income policy, and you may think that you are totally protected from a disaster. Unfortunately, most policies do not cover utility interruptions—power, water, and communications--that originate away from your premises (for instance, the utility generating station may have been damaged or transmission lines could be down).

Losing these services for an extended period can be financially devastating. The first step is to evaluate the exposures facing your company. Will being out of power for hours or days adversely impact your operations and profits? If you come to the conclusion that it will, you should consider an endorsement that extends your coverage to include utility services interruptions.

Get back in business quickly with a Disaster Recovery Plan

In addition to the right insurance, a Disaster Recovery Plan (DRP) - a plan that describes how work can be resumed quickly and effectively after a disaster – is another element to ensure that a disaster doesn’t shut your business down. It consists of the precautions taken so that the effects of a disaster will be minimized and the organization will be able to either maintain or quickly resume critical functions. Typically, disaster recovery planning involves an analysis of business processes and continuity needs; it may also include a significant focus on disaster prevention.

Plans vary from one type of business to another, depending on the processes involved, and the level of security needed. Disaster recovery planning may be developed within an organization or purchased as a software application or a service. It is not unusual for an enterprise to spend 25% of its information technology budget on disaster recovery.

Contact Us for Help with Your Business Interruption Insurance Needs

A DRP, along with business interruption coverage, constitutes the business continuity planning that could rescue your business after a disaster. Depending on your particular business, properly planning for your business interruption insurance needs can be complex, but the well-trained staff at American Insuring Group can help. Click here to contact us or give us a call at (800) 947-1270 or (610) 775-3848.

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