Choosing the Spring in your bounce-back plan
Four options for Business Interruption Insurance
No one likes to pay for insurance, but when you spend so much time, energy and finances on building your business the last thing you want to worry about is whether your business would survive a loss.
Most people would never consider starting a business without buying insurance to cover fire damage. However, it’s just as important to get insurance to cover your loss of income while the building is being restored. Business interruption insurance compensates you for your lost income while your business is closed due to an insured loss
As your insurance advisor will tell you, when it comes to choosing the right coverage to protect your business profits, there are quite a few options to choose from:
Gross Earnings: this coverage pays only until your insured property is replaced or repaired. As soon as your business resumes, the coverage stops paying, even if you haven’t regained your previous earning level. Another version of this coverage limits not only the period of time you can be covered, but also the amount payable in any one month. Although this kind of coverage is less expensive, it may not be adequate for your needs.
A Profits Form policy: this continues to pay benefits until your business resumes its normal, pre-interruption level, up to your policy limits. This kind of coverage usually costs a bit more, but is well worth the price for many businesses.
Extra expense: this insurance is designed for businesses that need to keep running while they’re recovering from damage. It covers extra expenses like re-locating to another building temporarily or outsourcing work.
Rent or Rental Value coverage: If you generate income from buildings or space you rent out to others, this may be the coverage you want to consider. If you are out rental income because of an insured loss, this coverage provides you with the lost rent money until the repair or replacement is complete.
Actual Loss Sustained: this is an excellent, extremely broad form of business interruption insurance. It’s similar to a Profits Form policy, but it pays up to the actual loss sustained. For example, if your business property policy insures you for fire, and that fire is damaging enough that you can’t operate your business, you’ll be covered for the loss of gross profits and extra expenses, including rental value.
Hopefully this will give you a basic idea of the options available to you when considering business interruption coverage for your small business.
Written by: Chris Bradshaw RIB.(Ont.) Commercial Insurance Specialist, Josslin Insurance
About Chris: Chris Bradshaw is a Commercial Insurance Specialist with Josslin Insurance and has over 13 years experience in listening to business owners’ needs and providing them with the information they need to choose from the many options available to Josslin Clients.
If you have any questions about insurance for your small business or would like a free assessment of your insurance risks, feel free to email Chris at firstname.lastname@example.org.