BUSINESS INTERRUPTION INSURANCE IS VITAL TO BUSINESS SURVIVAL
In today’s global economy, a business owner needs to know what can happen to
all the hard work if the business is not correctly insured against the
destructive force of a natural disaster such as a fire, tornado or
hurricane. If the business does not reopen soon after a disaster, customers
cab be lost to a competitor across town or to others halfway around the
world. Skilled employees might have to leave to gain employment elsewhere. A
fast resumption of business after a disaster is essential to the owner, the
employees and the local economy. There is an applicable saying that a
community does not recover from a disaster until local businesses recover.
While most business have insurance to cover their buildings and equipment,
many business having to shut down following a disaster do not survive
because they have no income for days, weeks or even months. Frequently, the
businesses that do survive the disaster are the ones that have business
Business interruption insurance compensates for lost income if a company has
to vacate the premises due to disaster-related damage that is covered under
the property insurance policy. Business interruption insurance covers the
profits that would have been earned, based on financial records, income tax
returns and recent operating statements had the disaster not occurred.
Business interruption coverage is typically not sold separately; it is
either an endorsement to a property insurance policy or included in a
package policy. Many options are available that can be purchased and may
include lower coinsurance requirements (deductibles), payroll coverage for
employees and officers and an anticipated return time to normal operations.
Other options may include income lost from renting space to another business
or extra contingency expense to cover higher prices paid to an alternate
supplier when the original supplier is shut down and cannot deliver
materials Make sure the waiting period in your policy is known that is
applicable to the business.
It is recommended that a business eliminate any waiting period provision for
any type of business income coverage, and instead have a known dollar
deductible based the business's own level of risk tolerance. If there is a
dollar deductible instead of a waiting period, the business won't be covered
for the first losses up to that amount, but will immediately be covered in
full for any amount above the deductible.
Services Interruption/Off Premises Power coverage can help with losses
suffered from loss/damage to the property of any service provider including
electrical equipment & systems, fuel, water, gas, feedstock, pulp, liquid
gases, sewage, steam, telephone, fiber optic cable, telecommunications,
heating, refrigeration and/or air conditioning systems, or utility plants.
For example, this could include spoiled food at restaurants and supermarkets
from interruption of power or telemarketers unable to communicate because of
the disruption of phone lines.
The need for insurance is a fact of life in today’s business environment.
Knowing how the insurance policy works, what the options are, what types of
deductibles are involved and how related costs are set up are essential to
the survival of the business. Business owners must meet with their Florida
licensed insurance agents and review business needs on a routine basis.
Schedule a meeting at least annually with the agent, financial advisor and
CPA to make sure business goals are understood and that the team is working
toward those goals.