If a loss caused your business to shut down for
an extended period, your policy may not provide the income to continue
payroll for key employees?
As a business owner,
you are probably aware of the importance of insuring your building and its
contents against any disaster. But have you taken steps to insure
your income? If a tornado or other tragedy interrupts
your business operations, lack of income will be one of your greatest
losses. It is essential not to overlook the need for business income
insurance, one of the most valuable insurance coverages available to your
A business income
policy is activated when daily operation is suspended due to a covered
peril, such as a storm, fire, explosion, or other disasters. The
insurance is designed to provide the income that your business would have
generated under normal circumstances, making it possible to meet
fixed expenses such as rent, utilities, loan payments and payroll.
While business income
policies vary, most limit coverage to an interruption caused by direct
physical wreckage, by a covered peril, or to property at the insured
site. In most instances your policy would carry extra expense
coverage, in which case your insurer would also pay any expenses incurred
to hasten your recovery or otherwise reduce your loss. The Insurance
Services Office (ISO) has two business income forms- one with extra
expense coverage and one without. You may also purchase extra
expense coverage by itself.
Since you cannot
predict when you may need to file a business income claim, the next best
thing is to be prepared for it. Knowing the proper actions to take
in the wake of a catastrophe can expedite the claim process and spare you
a great deal of aggravation.