Business Income Extra Expense coverage responds to the resulting financial loss & the additional expenses necessary to maintain the business, payroll for employees, and customers.
Business owners must also protect themselves against financial loss due to a slowdown or shutdown of their operations that can result from the damage or destruction to their property.
Some common questions as you start the discussion:
- How do I protect my business with business income coverage?
- Where do I start?
- How do I set a limit?
- What should I include in the business income limit?
- What is excluded in the business income limit?
- What type of coverage should I go with?
- What do I take into account?
Business owners need to ask and evaluate how long will it take to:
- Obtain necessary permits & comply with building ordinances/codes
- Repair/reconstruct building or obtain new facility
- Obtain and install equipment / assembly lines
- Re-assemble work force
- Get production back to “pre-loss” levels
- Get sales to the level that would have been achieved had there not been a loss
- Identify the longest possible interruption. “Worst Case”
- Consider peak seasons.
- Consider employment market conditions and training of new employees or loss of key employees.
- Identify and analyze other situations that could affect repairs & the restoration of a business.
The Business Income (BI) worksheet is a great tool for walking through this thought process. The worksheet helps the business owner assess loss potential and determine proper coverage/limits.
Coupled with the above analysis is the development of a business continuation plan.
For more information about business income from dependent properties, business continuation, business income worksheets or property insurnace, contact knowledgebroker Scott Brookes.
About Scott
Scott has over 25 years of risk management, risk control, underwriting and leadership roles with insurance carriers. He has detailed experience in large accounts, large property exposures including fire protection engineering, property valuation including bduilding, business personal property, business income, and acting as a risk manager for insured’s. In addition, Scott has written and taught a number of property training classes, property valuation classes, and business income valuation classes.
