By Chris Richmond for WorkBoat Magazine
You have had a catastrophic fire loss at your boatyard. Your insurance policy responds to the property loss but how does your business survive while you rebuild? This is where your business income coverage becomes very important.
Like loss of use coverage on a vessel, business income coverage is triggered due to a slow down or suspension of your operations caused by a covered cause of loss to your commercial property. A fire in your shop or a burst water pipe which causes damage are just two examples. Business income coverage applies to the loss suffered during the time required to repair or replace the damaged property. It can also extend to losses suffered after the repairs are completed for a specific number of days.
But how many days will it take to rebuild your business property and how many days does your policy provide? Many policies only provide one year of business income. The time period for this coverage would begin shortly after the date of the loss. How long will it take for any claims adjustors or fire marshals to inspect the loss site? And then how long will it take to have all the debris cleared and the site ready to rebuild? And speaking of rebuilding, how long will it take to get a contractor lined up to start the actual building process? You could be three to five months into your business income policy before the work actually starts.
When looking at business income coverage – also known as business interruption coverage – you should remember to include extra expenses. This is the insurance which pays for additional costs in excess of normal operating expenses – what your business spends to continue operations while your property is being repaired or rebuilt, including, for example, costs you incur to relocate and advertise this new location. Your extra expense coverage begins immediately after your claim occurs. Your actual business income kicks in three days later.
Business income insurance is an essential safeguard for any business. It enables business owners to focus on rebuilding their business without the stress of no actual income coming in. Key to this coverage are adequate limits and timeframes.
