When disaster happens, a business may need to close temporarily. And when closed, that means loss of income.
Loss of income is one of the main reasons most businesses don’t reopen after a serious loss. Expenses don’t suddenly go away. In fact, they may spike significantly. Without revenue, it can be difficult for a business to survive.
Business Income insurance helps keep the capital flowing when a businesses doors are shut temporarily and indefinitely after a loss.
With business income insurance, you are reimbursed for revenues lost during downtime when your property is damaged by fire, theft, vandalism or a natural disaster. Business income will also reimburse for expenses incurred to minimize the suspension of business operations, such as rent paid for a temporary office while the damaged property is being repaired.
What’s more, options might include coverage for business interruption resulting from:
- Loss of off-premises utility services, including water, communication or power
- Loss to a dependent property, such as a major supplier or customer
- Electronic vandalism for business conducted over the Internet
- Food contamination in restaurants and food service businesses
Business income coverage is usually included under a property insurance policy, but you should double-check that you have this and understand what the terms of the policy form are. If you have a Businessowners insurance policy, business income insurance will most definitely be included under the policy.
Source: The Hartford
I was in the office Friday just before the lunch hour when I saw a Twitter news feed, “#BREAKINGNEWS: Car crashed into nail salon in Rolling Hills Estates along Deep Valley Drive – 5 minor injuries reported.” Seeing this was no more than a couple of miles from the office, I took a drive up the hill to check out what was going on, and I brought the camera with me. Here’s what I found:
It turns out an elderly woman driving up a ramp in the Rolling Hills Estates parking lot, crashed through a guard rail and went airborne before plunging into this nail salon. The 2001 Infiniti landed completely inside the Peninsula Center business. Somehow, the woman’s gray Infiniti missed hitting four other people as it embedded itself inside the building. .
From seeing the premises first-hand, it’s remarkable that nobody was seriously injured or even killed!
The crash crushed furniture and demolished tables inside. City building inspectors were expected to check the salon for structural damage. Here are a few still photos:
Looking at this video and pictures, it’s evident that this salon will be out of commission for some time. However, if the business is adequately insured, the business owner shouldn’t have to worry much. The following coverages should keep the business alive:
- Building and Business Personal Property: Coverage to help pay for the cost to repair or replace property, including inventory, office furniture or fixtures damaged by the accident. Not only is the business covering their own contents, but think about the building owner carrying a policy to cover the building itself.
- Business Income and Extra Expense Insurance (AKA – Business Interruption Insurance): Coverage that reimburses a business owner for lost profits and continuing fixed expenses during the time that a business must stay closed while the premises are being restored because of physical damage from a covered peril, such as a fire. It also may cover financial losses that may occur if civil authorities limit access to an area after a disaster and their actions prevent customers from reaching the business premises.
On the flip side of the coin, let’s hope the driver of the car carried an appropriate amount of liability insurance as you can bet the insurance company for the nail salon and the building owner will be looking to subrogate their losses as a result of the drivers negligence (The legal process by which an insurance company, after paying a loss, seeks to recover the amount of the loss from another party who is legally liable for it).
As with any other insured, do you think this business owner ever thought this would happen to them? If you own a business, don’t think it can’t happen to you. Don’t wait to carry business insurance coverage. Cover your business now and always expect the unexpected.
If you have a business with revenues typically less than $10,000,000, you might be eligible for what’s called a Businessowners Policy, commonly referred to as the (BOP). Businessowners policies have been compared to a homeowner’s policy for business and have become a very popular over the years. The reason is that these policies combine a variety of basic coverages into a package at a premium that is usually less than the cost of purchasing these coverages separately.
Businessowners policies combine property, general liability, and business interruption insurance along with a list of supplemental coverages that businesses may need. Optional coverages can also be added to meet specific needs of the business. It’s kind of like bundling your cable, internet, and phone together under one package instead of purchasing them individually. Maybe this isn’t the best analogy though, as I know first hand that my cable/phone/internet package costs a ton!
There is an extensive list of business classifications eligible for Businessowner’s policies. To name a few, retail stores, offices, and apartment complexes all the way to restaurants, dry cleaners, and beauty salons.
Chances are that if your business fits under these guidelines, you are already insured under a BOP policy. However, if you are uncertain, be sure to check in with your insurance agent to verify. You may just save yourself some money while carrying better coverage in the event of a loss.