Business interruption insurance can be as vital to the survival of your business as liability insurance is, especially in the State of Florida. Most people would never consider opening a business without buying insurance to cover damage caused by a fire or lawsuit. But many small business owners fail to think about how they would manage if a fire or other disaster damaged their business premises so that they were temporarily unusable. Business interruption coverage is not sold separately; it is added to a property insurance policy or included in a package policy, like the Business Owner’s Policy (BOP) bundle.
Business Interruption Insurance
Florida is home to an annual hurricane season and the lightning capital of the world (Tampa). It is also no stranger to severe storms that cause flooding and wind damage. Property insurance protects damage to your business’s physical location and contents owned by the company. It does not, however, cover lost income if your business is unable to be open following these disasters or during repairs.
What Will Business Interruption Insurance Cover?
A business that must close down completely while the premises are being repaired may lose out to competitors, which is why it is commonly referred to as Loss of Income Coverage.
- Business interruption insurance compensates you for lost income if your company needs to vacate the premises due to disaster-related damage that is covered under your property insurance policy, such as a fire. Business interruption insurance covers the profits you would have earned, based on your financial records, had the disaster not occurred. The policy also covers operating expenses, like electricity, that continue even though business activities have come to a temporary halt.
- Make sure the policy limits are sufficient to cover your company for more than a few days. After a major disaster, it can take more time than many people anticipate in getting the business back on track. There is generally a 48-hour waiting period before business interruption coverage kicks in.
- The price of the policy is related to the risk of a fire or other disaster damaging your premises. All other things being equal, the price would probably be higher for a restaurant than a real estate agency, for example, because of the greater risk of fire. Also, a real estate agency can more easily operate out of another location.