Business Interruption Insurance: An Essential Income Safeguard

Business Interruption Insurance: An Essential Income Safeguard

Is your business prepared to weather a storm? Fires, storms and other natural disasters can force businesses to close their doors. Even when the situation is only temporary, the loss of income can be substantial. Business interruption insurance provides key protection against this common problem.

Disasters strike twice.

When a disaster hits, it can impact a business in two ways.

First, the disaster can cause severe property damage. Buildings may be rendered unsafe for occupation. The property inside – such as equipment, supplies, merchandise, computer systems and furniture – may also be damaged or destroyed.

Second, the business may experience a loss of income. If the building isn’t safe, neither employees nor customers will be able to enter. The surrounding areas may be hazardous as well. On top of that, damage to merchandise, computer systems and other essential items may disrupt business as usual.

The resulting loss of income comes at a particularly bad time, when businesses need all of their resources to recover from the property damage.

Some businesses never recover. According to FEMA, 40 to 60 percent of businesses never reopen their doors after a disaster.

It’s a scary statistic, but there is hope. Although business owners may not be able to prevent damage from disasters, they can minimize the impact with appropriate insurance coverage. In addition to coverage for property damage, businesses need coverage for the other costs associated with business interruption.

The risk is increasing.

In 2018, Hurricane Michael struck Florida. About 10 months later, WLRN reported that local businesses were still struggling to get back on their feet after the disaster.

In 2019, the United States experienced 14 weather and climate disaster events with losses of more than $1 billion each, according to the National Centers for Environmental Information. The disasters included severe storms, tropical cyclones, floods and wildfires. It was the fifth consecutive year with at least 10 events with losses exceeding $1 billion.

Of course, a disaster doesn’t have to do $1 billion in damage to threaten local businesses. Smaller disasters, such as building fires, can also be devastating. Between 2011 and 2014, U.S. fire departments responded to 5,600 restaurant fires, according to the U.S. Fire Administration. Offices, retail stores and other businesses can also experience fires.

Make sure your business is protected.

You probably already have commercial property and casualty insurance policies to protect your business against the property damage that a disaster can cause. Make sure your coverage includes business interruption insurance.

Business interruption insurance can provide coverage for operating expenses and lost profits after a disaster disrupts your normal operations. Policies may provide coverage for additional expenses, as well, such as paying for a temporary location until your normal location can reopen.

Wilson, Washburn & Forster is a boutique independent insurance agency that has been in business since 1961. We have expertise and connections in the commercial property insurance market and can also help customize the right mix of coverage and endorsements to protect against the unique exposures of your business.  You will find that our experience, claims handling, service, and community commitment is unrivaled.

Contact us today for a complimentary analysis of your current insurance program by an insurance specialist in this field at 786-454-8384.

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