If a hurricane makes landfall in your community, do you have a plan to help your business recover from damage to your facility and your balance sheet? Business interruption insurance offers an added layer of protection for your employees, property, and cash flow.
Business Interruption (BI) coverage is a critical part of a company’s ability to stay resilient after incurring losses from disaster-related damages. It can make the difference between recovering from a loss and having to make difficult decisions about closing the business.
Understand and look for these five key things when reviewing your organization’s business interruption coverage:
1. Know when business interruption (BI) coverage responds.
Unless endorsed, it 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.
2. Understand the time deductible.
Most business insurance 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.
3. Look for 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.
4. Consider contingent business interruption coverage.
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.
5. Complete a business income worksheet with your insurance advisor annually.
Stay proactive to help ensure you have the correct policies and limits in place before a loss occurs. Every year, review your business income worksheet and have 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 and risk management solutions. Take the time now to speak to an advisor at The Baldwin Group about your coverage to help stay resilient and recover more quickly after a loss.
This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The content of this document is made available on an “as is” basis, without warranty of any kind. The Baldwin Insurance Group Holdings, LLC (“The Baldwin Group”), its affiliates, and subsidiaries do not guarantee that this information is, or can be relied on for, compliance with any law or regulation, assurance against preventable losses, or freedom from legal liability. This publication is not intended to be legal, underwriting, or any other type of professional advice. The Baldwin Group does not guarantee any particular outcome and makes no commitment to update any information herein or remove any items that are no longer accurate or complete. Furthermore, The Baldwin Group does not assume any liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Persons requiring advice should always consult an independent adviser.
