Covering the Recovery: Business Interruption Insurance

By Mike Drew, The Reschini Group

Business Interruption Insurance for Operational Recovery

Through an accident, a fire, a natural disaster – the cause of the event can be any number of things – you have lost your property and inventory required to conduct a profitable business.

As if that weren’t enough of a setback, you quickly come to the realization that, without those essentials, there remains no way to generate future income until your property and inventory can be rebuilt and restocked.

Business interruption insurance replaces revenue lost when a company cannot conduct business after a catastrophic event.  Terms of a specifically written policy determine how much in lost revenue can be provided on a per-diem basis, to cover expenses that may include mortgage and insurance payments, employee payroll, and others.  This specialized segment of insurance coverage can be purchased on an annual schedule, and can extend beyond the timeframe required to repair or replace the directly damaged property.

The key elements of a favorable claims settlement would be the policy language being written broadly enough to cover the business expenses and profits that the owners want covered for the period of time needed to resume normal activities.  Claims are then settled based upon the details in the policy language, so policyholders may prefer very broadly written coverage, sufficient to handle a true catastrophe.

Once a claim is filed, a brief waiting period must be observed after the loss is suffered by the business – think of it as the equivalent of paying a small deductible – before payments to cover any lost revenue can begin.

Any discussion of business interruption, however, must also include a reference to coverage for extra expenses the policyholder may incur beyond normal operating expenses during the period of restoration that reduce the amount of loss-related expenses incurred to mitigate damages.  These “extra expenses” may include generators, temporary office space and computer equipment, overtime wages, employee meals outside of normal workdays, and expediting expenses necessary to speed the replacement of machinery, equipment or other personal property.

Insurance exists to help keep people and their enterprises on their feet, should the unthinkable happen.  Business interruption insurance fulfills that role in striking fashion.  It’s worth the investment, to safeguard your larger investment.

The professionals at The Reschini Group can help talk you through how business interruption insurance can be used to protect your company, including value-add services such as disaster recovery planning and business income worksheets to more accurately plan for a worst-case scenario.  Contact us at 724-349-1300 to set up a time to talk.


Copyright 2017 The Reschini Group

 

The Reschini Group provides these updates for information only.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

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