Any business owner that is serious about protecting profits in the event of a covered loss should consider purchasing business interruption insurance.
What is Business Interruption Coverage (BI)?
Business interruption covers a business for loss of income as a result of a covered loss. It is also known as business income, loss of profits, time element , use and occupancy coverage.
What does business interruption insurance coverage cover?
Business interruption (BI) kicks in when your business cannot operate as a result of a covered loss. The property is untenable as a result of the loss and therefore operations must shut down. BI covers the continued business operation expenses, profits/losses that would have been earned had there been no loss. Coverage begins from the time of the loss and continues until the time that the business is back up and running at its pre loss state.
What if I can operate my business at a temporary location rather than suspend operations?
If your location is damaged as a result of a covered loss and you can operate at a temporary location, you need to buy extra expense coverage. Extra Expense coverage will cover your costs above and beyond your normal operating expenses for you to continue operating your business at a temporary location. Among other things it also covers the cost of relocation. Extra expense coverage is a compliment to business interruption. For your protection it is wise to purchase both coverages.
What if my business is interrupted due to a loss at my supplier? My premises are ok, what happens then?
When your supplier is shut down, that is a situation out of your control. To protect your business you need to buy a coverage called Contingent Business Interruption. It will provide coverage when you have to suspend your business operations as a result of a covered loss to your independent supplier.
As a landlord what happens if my building is untenable?
The coverage you would buy is called loss of rents. Its business interruption coverage for apartment and office buildings that covers the rents you would have received if your building had not suffered a covered loss and were tenable.
How do I determine how much I need?
There is a worksheet called a business interruption worksheet (BI worksheet). Completing the worksheet with the help of your accountant if necessary will ensure you are purchasing the right amount of coverage to suit your business.
You can complete the old-fashioned BI worksheet that requires pen and paper, or, if you feel more comfortable with completing computer forms, you can complete an automated BI worksheets as offered by Zurich Insurance company. Use which ever you prefer, just as long as it is accurately completed.
