As the federal government shutdown continues, the large majority of us continue about our operations in the private sector. We assume the government will eventually reopen, federal employees will return to work, and our politicians will bravely carry on serving the American people with distinction. Well, one can hope…
Now, consider the possibility that the shutdown does not affect the federal government and its employees, but rather your company and your employees. In the event your business experiences a temporary suspension of operations, are you properly covered for all that may follow? This is the perfect time to ensure that your commercial property policy includes adequate Business Income coverage.
What is Business Income Coverage?
Business Income coverage is added to your Commercial Property Policy and is designed to cover the costs associated with an interruption of your business operations. For example, if a fire spreads through your building, it will undoubtedly cause significant damage and will bring your operations to an immediate halt. Your Commercial Property Insurance will respond and will begin rebuilding the damaged location. Depending on how long it takes for the rebuild, your business may be inoperable for months, a full calendar year, or even longer.
With operations suspended, how will you pay for the mortgage, utility bills, property taxes, key personnel payroll, etc.? How will you make up for the loss of your income while the building is being repaired? If your policy contains adequate business income coverage, these lost profits and continuing expenses will be covered, and your business can seamlessly resume when the building is repaired.
How Do You Prepare?
Carrying the proper amount of business income coverage is essential to mitigating the risks of a large property insurance claim. Depending on your policy, you may be required to provide a specific dollar amount to be covered, or you may be offered “Actual Loss Sustained” for a specified period of time (commonly 12 months).
If your policy requires a specified amount, it is imperative that you understand the profits and expenses that your company experiences monthly. This will allow you to properly determine the correct amount of coverage. We recommend you review the following:
- Net
Income
- Income the business would have earned if no loss occurred
- Continuing Expenses
- Rent
- Utility Payments
- Taxes
- Mortgage Payments
- Property Taxes
- Equipment Leases
- Key Personnel Payroll
If needed, many of our carrier partners provide detailed income and expense spreadsheets that will accurately determine proper coverage amounts. Contact us for more information.
What Events Can My Business Be Covered For?
While there are many different commercial property coverage forms, the most commonly covered perils are:
- Fire
- Theft
- Vandalism
- Sprinkler Leakage
- Hail
- Windstorm
This is also a great opportunity for you to review your specific policy coverage form. Various forms include specified perils, broad form, and special form. It is imperative that you understand the coverage form your commercial property insurance policy is written on as this may determine whether your claim will be paid. Contact a coverage design specialist at Swarts, Manning & Associates today for a complete policy review, or to get a quote.
Find out how we can help.
At Swarts, Manning & Associates, we provide a unique perspective on your coverage options, and help to determine which carrier best fits your business. We strive to find you the broadest coverage at the best available rate. Give us a call to get started: (833) 878-2820.
Swarts, Manning & Associates covers relevant topics for your business weekly. Stay tuned to hear more discussions about managing your insurance and industry-specific tips.
