Business Income Insurance Q&A

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What is Business Income Insurance?


When you are running a business, you never know what issues may arise that will force you to close your doors temporarily. Business Income Insurance, which is sometimes referred to as Business Interruption Insurance, was created to provide your business with income if you have to shut your doors temporarily. Just because your business has experienced an unexpected event, why should you have to lose money in addition to closing the doors? Well, you do not have to if you are covered under a Business Income Insurance.



Q1. Who needs Business Income Insurance?


A1. Anyone who owns a business should carry business income insurance. If you do not, and let’s say, the power in your building goes out for two weeks, then you are in trouble. This is because you may end up in a situation where you don’t earn any revenue from your business during that time span. And there is not much that you can do about it either. However, if you had a business income insurance coverage in place prior to the power outage, your insurance carrier would send you checks to cover the loss in revenue for your business until the power was restored.



Q2. What if I had my kitchen restaurant catch fire, and I had to close the business down for a month. As a result, I had to rent out another space, just to run my business. Is there any way Business Income Insurance could have protected me?


A2. Yes. If a fire has occurred, and you had to rent out a new space just to conduct business, the business income insurance would pay you for the relocation, plus the expenses associated with the move. The coverage would also cover the cost to promote your business to new customers, albeit at that new temporary location.



Q3. I do not have any other commercial insurance at all. Can I still get a Business Income Insurance policy?


A3. Business income insurance works parallel with a property liability insurance policy. So the answer is NO; you cannot get business income all by itself. You would need to have a property liability policy in place before adding the business income coverage to your insurance portfolio. Some business owner’s policies come with business income insurance as standard.



Q4. What if an earth quake occurs and my business premises is damaged forcing me to close the doors until repairs are completed. Could a Business Income Insurance coverage provide my business income too?


A4. Unfortunately not. Business income is an amazing coverage, but it specifically excludes supplying a business income for natural disasters such as earthquakes and floods.



Q5. What if my business did not experience any unexpected events, but the neighboring business did. As a result, there is a constant flow of dump trucks, construction workers, cranes and all types of heavy equipment blocking a clear entrance for my customer to reach me. I have lost thousands of dollars in unearned revenue. Will a Business Income Insurance help me in this unusual situation?


A5. Yes! This happens more than you would think. Business income insurance can still provide your business with lost income as a result of a construction crew from a neighboring business, blocking your customers out.



Q6. I live in “tornado alley.” There have been many times where the mayor has issued a state of emergency, and forced all businesses to closed down and evacuate. When we were given the green light to go back to work, I lost money that I would have made if my business had stayed open and if a tornado had not eventuated. Can Business Income Insurance provide funds for money my company would have made based on a normal day’s activities?


A6. Great question. The short answer is Yes! With business income insurance, most insurance carriers who provide the coverage, will also provide income on grounds of civil authority. A civil authority is when there is a state of emergency or a natural disaster where a city is forced to evacuate. Terroristic acts do not count as a civil authority and are excluded.

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