17 Oct Did You Know? October 2008

Did you know that in the event of a disaster, business interruption insurance can be just as vital to the survival of your business as coverage for your building and its contents?

While many business owners are concerned about property damage and the accompanying financial loss that can result from a disaster, they often neglect to protect themselves against the impact such damage could have on their revenue stream. That’s why they should consider acquiring business interruption insurance, which covers reductions in net income and provides an organization with the funds needed to pay normal operating expenses. Remember that a forced temporary closure of your business does not mean that your expenses stop. Payroll, mortgage/rent payments, money owed to suppliers, taxes, and even your own salary draw are all necessary expenses that you must meet. Business interruption insurance will keep needed capital flowing when you need it the most.

Extra expense insurance is also available to cover those expenses over and above normal operating costs that your company may incur as a result of maintaining operations during the repair/reconstruction period. Extra expenses are those that would not have been incurred had there been no loss or damage to your property, including the costs associated with relocating your business, such as renting space in a temporary location, advertising the new location, and obtaining additional equipment and supplies to sustain operations.

You have worked hard to establish your business and make it profitable. Being forced to suspend operations because of a fire, hurricane, or any other disaster has the potential to cause severe financial hardship. Adding business interruption coverage to your current insurance program is a prudent measure that can ensure that your company remains operational in the most difficult of circumstances – the times when the value of having the right insurance coverage becomes immeasurable.