5 Things to Know About Business Interruption Insurance this Hurricane Season
It’s hard to forget the fear, panic and aftermath of Hurricanes Irma and Matthew. It’s even harder to believe that we have already reached the 2019 Atlantic hurricane season. Although forecasters predict 2019 to be less active than last year, it only takes one hurricane to devastate an area completely. With this in mind, businesses can protect their employees, property and cash flow with Business Interruption Insurance.
Business owners often ask us about Business Interruption Insurance and how it can help protect their business. Business Interruption (BI) coverage is a critical part of a company’s ability to stay afloat if they suffer a loss because of a Hurricane. It can make the difference between recovering from a loss and being forced to cut operations or go out of business.
Here are five key things to understand and look for when reviewing your BI coverage:
· BI coverage, unless endorsed, will only respond to a loss if there is property damage at the insured property. Additionally, traditional BI coverage doesn’t cover income lost if the business shuts down because of a flood.
· Understand the time deductible. Most BI coverage comes with a waiting period, the number of hours after a covered physical loss that must pass before the business interruption coverage will kick in to start paying anything, which is usually 72 hours. Some BI policies may provide the option of waiving the waiting period or decreasing the number of hours.
· Offsite Utility Interruption Coverage. Coverage can be expanded, by endorsement on certain policies, to include income lost because of power outages that occur away from the insured property. For example, perhaps your business was spared from any property damage, but your utility company wasn’t as lucky. This coverage can protect your company if you aren’t able to resume normal operations because of offsite utility interruption.
· Contingent BI coverage might make sense for your business. Some companies depend on third parties to operate. If you are a manufacturing company, you might rely on another business for tooling or shipping. If there is damage caused to a third party that you utilize, it might affect your operations and cause a loss of income. Contingent BI coverage can provide an added layer of protection.
· Complete a Business Income Worksheet once a year with your insurance advisor. Trying to piece together what the loss is after the fact is daunting and you might not have the correct limits. Every year, review your business income worksheet and have the copies of the correct documents (bank statements, payroll, tax returns, profit and loss statements, etc.) on file in case of a claim.
There are many ways businesses can protect themselves through a combination of internal preparedness and investing in comprehensive insurance. Take the time now to speak to a BKS Commercial Risk Advisor about your coverage, especially Business Interruption Insurance. You will be glad you did.
Visit the BKS hurricane preparedness website for more helpful resources this hurricane season.