The Basics of Business Loss Insurance

Business loss insurance – sometimes referred to as “business interruption insurance” or “business income coverage” – is a specially-designed form of insurance that aids in replacing lost income and paying for additional expenses if or when a business is directly impacted by a peril that is outlined as “covered” on said policy.

In most instances, this comes standard with an insurance policy for business owners. Your coverage is a critical component of your business. If you own and/or operate a business, it is imperative that you learn as much as possible about the business loss coverage that may be a part of your insurance coverage. This guide is designed to provide you with the basics.

What Does Business Loss Insurance Actually Cover?

There are many perils that may negatively impact businesses. This type of insurance is designed to protect businesses from a lost income if they have been directly affected by one of the perils outlined in the policy.

The most common coverages include fire, lightening, theft, wind, objects that have fallen, and many insurance companies may offer coverage from a type of contagion that results in the suspension of the business by a public health professional if that contagion actually originates from the business.

Examples include a bedbug infestation, an outbreak of salmonella, or an outbreak of meningitis that stems directly from the covered business.

Basic Reimbursements

Generally speaking, there are two forms of basic reimbursements provided by insurance companies that offer business loss insurance. These are outlined below, with a brief explanation of each:

  1. Lost Income -The insurance company will review the pre-loss amount of money that your business earned in order to calculate the amount provided in the event of lost income. They will take the revenue and then minus the amount you are paying for ongoing expenses. The income must be lost due to merchandise that has been destroyed.
  2. Additional Expenses -This component of the business loss insurance coverage covers anything extra that your business experienced as a result of the impact of the covered peril. For example, if your business endured a fire and you have to relocate it, the additional expenses would be the costs associated with the relocation and the amount of rent you must pay on the new location where you will be operating.

The Restoration Period

When purchasing business loss insurance, you must ensure that you read all associated documentation associated with the policy. There is a certain amount of time that the policy is designed to help pay for the lost income and the additional expenses you incur while restorations take place. This is referred to as the “restoration period”.

In most instances, this will initiate within 1 to 3 days. Then, it could last up to 12 months. Of course, this is not the standard for all restoration periods, but it is the most common amount of time for most insurance companies. You must know what your restoration period is because once that amount of time has passed, the coverage will immediately expire.

If you would like to learn more about business loss insurance or are interested in obtaining a policy, you may call us here at Modica Associates today at: 718-855-1836

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