Property claims can directly affect your ability to operate and may cause your business to suffer an income loss. Business Income Protection provides money for the continuation of your business operations after a covered loss, including normal ongoing operating expenses and payroll.
There are three basic forms of Business Income methods that are typically employed:
- Monthly Indemnity
- Actual Loss Sustained
- Coinsurance
Of these three forms, the Coinsurance form offers the most flexibility and provides the best protection.
Unfortunately, most insurance agents take the easy way out and use the Actual Loss Sustained form. A problem exists in that this form only provides up to 12 months’ protection while everything is being restored and rebuilt. Furthermore, it does not provide for more than a 30- or 60-day Extended Period of Indemnity. We have seen situations where more than 12 months are needed during the rebuilding process. The Extended Period Of Indemnity often requires as much as 360 days from the time your doors are open to rebuild your client base back to pre-loss levels! There are far too many stories of businesses that survived the rebuilding phase but still fail because they cannot rebuild their customer base quickly enough.
Working with an established insurance professional to complete a Business Income Worksheet is a great solution. This valuable tool can help avoid Insurance-To-Value penalties. It can also help you establish a sufficient limit of income protection extending through the time it takes to rebuild your customer base.
The result: Your business survives and thrives through a potentially catastrophic claim.
