Protecting Your Income Statement
How Business Income and Extra Expense coverage can save your business.
You have always known it could happen, but you just never imagined it would happen to you. That dreaded fire that just destroyed one of your key business locations. Fortunately you had the proper coverages in place for the property so the insurance company will be covering the claim and writing you checks to rebuild the location just as it was. But now the reality of a whole new nightmare sets in: The location will not be fully restored and ready for use for eight months. Can you survive?
Fortunately there is an often overlooked coverage that is available to get you through this situation called Business Income and Extra Expense coverage. This is a rather complex coverage however the general concepts are enough to understand the importance of taking a closer look at your insurance program. There are two main components of this coverage that work together to save your business during the downtime.
Business Income Coverage
Even though your business may be unable to provide goods or services to generate income while the location is being restored, your obligations to pay rent, loans, taxes, etc. do not disappear. To make matters worse, some of your key employees are consider leaving your business to work for your competitors rather than going without pay for an unknown period of time. This is when having a premier insurance program comes into play. Business Income coverage is what provides the necessary funds to keep the business alive while productivity is down due to a covered claim. Through an in depth assessment of your accounting books, Business Income coverage can provide the life support your business needs to pay these expenses and make it through the downtime from the loss.
Extra Expense Coverage
It is important to you, your clients, and your insurance carrier that your business is up and running as soon as possible after a loss. In some circumstances, the best way to do so and minimize the damage is to temporarily relocate the business and rent equipment. Extra Expense coverage can be provided to pay for the new space, equipment, and even advertisements to your customers notifying them of the short-term changes. The goal of this coverage is to minimize your loss and expedite your recovery.
Make Sure Your Needs Are Met
It doesn’t have to be a fire destroying an entire location for this coverage to save your business from devastation. For example, DCI is currently assisting a client whose office is located on the 31st floor of a building through a Business Income claim as the building had a loss leaving their elevators unusable for several weeks. While you certainly do not need to master the complexities of this coverage, it is important to consult with a trusted insurance partner to make sure you get the protection this coverage provides.