Covering your Business for Loss of Income
Businesses are exposed to hundreds of risks and threats, some of which are completely out of your control – like damaging events such as a fire or windstorm. Standard property insurance can cover physical damage and losses, but what about a loss of income due to your inability to operate?
How to Cover Your Business for Loss of Income
Unfortunately, even if your business is shut down due to a damaging event that was out of your control, you’re still obligated to pay its bills and any other additional expenses that come with the damages. Fortunately, business interruption coverage can help keep your business afloat by reimbursing costs and losses such as:
- Expenses occurring because of operating out of a temporary location.
- Revenue lost from temporarily shutting down operations.
- Fixed expenses such as rent and utility costs.
In order to receive the reimbursement, there must be direct physical damage to the property caused by an insured event. How much reimbursement you get is determined by establishing what the business would have earned if the event never occurred and operations were continuing normally. It’s important to always keep accurate records of things such as past tax returns, profit and loss statements, and projected sales so that you’re covered should you ever need to use your business interruption coverage.
Understanding Business Interruption Coverage
Business interruption coverage isn’t a stand-alone policy, meaning you can’t get this type of coverage by itself. It can be included in other types of policies you need as a business owner such as a Business Owners Policy, Commercial Property Insurance, or Commercial Package Policy.
As is with other insurance coverages, business interruption insurance has limitations and exceptions. For example, if you have business interruption coverage as a part of a commercial property policy, the coverage will only cover events that are depicted in the core coverage. So if your core coverage doesn’t cover fire damage, you can’t receive business interruption insurance if your business catches on fire.
At Snellings Walters, we believe every business is unique, and that giving you access to the person creating your solution will help get you the policies your business needs. You can get in touch with us here.