A coverage that is often overlooked when a commercial insurance policy is being put together is business income coverage or business continuation coverage.
What this coverage does for the client is it protects them in the event of a disaster where they are put out of business. It will give them an income stream to continue their operations in the meantime until they can get back on their feet.
An example might be fire at your office or at your shop location or a tornado, and it puts you out of business. Obviously you can’t service your clients during a period when your business has been destroyed.
So what the business income coverage does is it will give you money to replace those expenses and pay the employees and get back up and running so you have some money there in the meantime.
There is also an additional coverage that goes with business income coverage called Extra Expense. Extra Expense will pay for the additional things you normally wouldn’t need during this period of restoration. If you have to lease additional space perhaps, or perhaps additional vehicles, this will pay for that extra cost that you incur while you are getting your business restored and back to normal.
There are two ways you can go about this, too. There is a stated amount of coverage where you have X amount of dollars for X amount of months and then your coverage expires, or you can go with actual loss sustained.
Actual lost sustained is the way we prefer to do it. It gives you your actual losses on income, and it goes typically for one year or 12 months after the date of the occurrence that caused the damage.
We prefer the actual loss sustained, but sometimes we do need to go with the stated value depending on the type of policies and products that we are using. Typically you will be asked to offer proof of income and profit and loss statements or tax statements in order to verify what your income was prior to the loss. The insurance company claim reps will work with you and help you come to the figures that are correct for your business income or your business continuation coverage.
It is a very important coverage. Do not accept a commercial policy that does not include this. Most of them do include this. Some of them need to be added on there. But make sure you have this. Without this coverage, and a disaster strikes, you certainly can be put out of business.
If you have any questions, feel free to call our agency, and make sure to browse the other videos on Philleo.com.
Thanks for visiting.