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Should My Business Purchase Business Interruption Insurance?

A Commercial Insurance update

When a fire destroyed a fifty-unit apartment complex, the owners found themselves in a tough situation.  Fortunately, the owners had insurance to cover the repairs and replacement of all the damaged units, and because the agent had done his job, the owners had business income, or loss of rents insurance.

Business Income coverage is a property coverage that is designed to pay the loss of income (rent is this case) following a total or partial shutdown of a business.  Business Income is designed to replicate the insured’s income stream and covers expenses as if no loss had occurred.

The 50 families that no longer had a place to live will not pay rent until they have moved back into their repaired units.  In addition, chances are, many will move on to other housing and will not come back.  However, the property owners still have expenses including a mortgage that will need to be paid.  There can be three major parts to Business Income insurance:

  • Business Income (BI) Coverage—replaces the lost gross earnings during the shutdown resulting from a covered property loss. Loss of rents is considered gross earnings.
  • Extra Expense Coverage—covers the cost to relocate to another location and continue operations. During relocation, businesses typically incur the extra expenses of rent, equipment lease and the cost of restoring databases.  All of this is covered by the “extra expenses” portion of the policy.
  • Ordinary Payroll Coverage—this optional coverage continues paying your workforce while you have no work for them. It prevents your trained employees from accepting other jobs while waiting for your business to recover.  This coverage is optional, but is recommended in many circumstances.

Our team of insurance professionals has the knowledge and experience to help you identify your risks and create cost effective solutions.

We are ready to help you better understand your risks. Please call our office today. Established in 1981 and located in Roswell, Georgia, we are dedicated to providing excellent service and competitive pricing but most importantly, professional analysis of the insurance needs of our clients. Our state of the art computer network allows us to make rate comparisons with several insurance companies to ensure that our clients receive the best we have to offer. We can help you with all your insurance needs including auto/car insurance, business insurance, life insurance, and wealth management.