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  • Business Insurance Coverage Check-Up
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    Adjusting Your Business Income Insurance Coverage

    Does your business currently carry business income insurance coverage? If so, assessing whether your policy continues to be right-sized for your business’s current financial position and revenues should be a vital aspect of any insurance review. If you don’t carry this type of coverage, this is an excellent time to think about whether adding it to your business’s defensive arsenal makes sense at your stage of growth.

    What is Business Income Coverage?

    Business income insurance coverage helps replace lost income when a business is forced to temporarily close or is inoperable due to a covered property loss (fire, wind, theft). Business income coverage can help cover costs until your business is up and running again, covering expenses such as payroll and monthly bills while your property is repaired or replaced. Learn more about business income insurance.

    The job of loss of business income coverage is to keep your business’s financial operations in sound shape, should you encounter a covered loss. For example, if your business – or a key supplier – is severely disabled by a storm and you need to close your doors for two weeks, your revenues may well suffer a shut down too. How will you meet your ongoing financial obligations like rent, payroll, utilities, and suppliers’ contracts (etc.)?

    Chances are if your revenues are rising, so are your ongoing financial obligations. If you’re in a business upswing, you’d be well advised to reevaluate the terms of your business income policy—or secure one. During the recession, many business owners saw revenues shrink and adjusted their coverage accordingly. However, if the revenue pendulum is swinging back in your favor, it may be time for another policy tune-up.

    Alternatively, if your revenues have dropped, along with your costs of doing business, you should evaluate your current business income policy in the light of these lowered risks.

    Business income insurance coverage helps replace lost income when a business is forced to close temporarily and can be added to a Business Owner’s Policy from The Hartford. Business income coverage is designed to cover a variety of risks.

    Business Income Coverage

    Business income coverage extension for essential personnel. It can be hard for businesses to continue to operate when imperative employees are unexpectedly absent. If this happens, business income protection can help cover the cost of lost earnings, and you can continue to run your business.

    Business income coverage for dependent properties. Many businesses depend on third parties for operation. This includes shippers delivering products you need, a manufacturer who builds your product or an anchor store where customers come in physically to interact with your employees. Business income from dependent properties can help cover lost business due to a third party’s inability to provide services or products you need to operate your business.

    Extended business income. If your business is forced to close temporarily, it can be challenging to get back to your level of business before the devastating event. Extended business income coverage can help replace the lost income while you get your business back on its feet.

    Business income coverage for cloud service interruption. Many businesses today depend on cloud storage to maintain and transfer data internally, as well as to vendors and clients. This additional coverage can help cover income lost due to an unplanned outage of your company’s cloud service.

    Business income coverage extension for off-premises operation. The risk of damage to your business’s tools and equipment may increase when you are working remotely. In the event work must stop due to damaged equipment, this coverage can help cover the lost income as well as costs for renting equipment to replace the damaged equipment.

    Business income coverage extension for off-premises utility services. If your business relies on off-premises utilities, including water, power, or communications, and those services are disrupted, this coverage can help cover the cost of lost income and additional expenses resulting from the interrupted services.

     

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    Game Plan

    • If you haven’t done so already, you should create a worksheet that details your business’s current operating expenses. If a catastrophic event occurred, how long could you keep your business going without generating revenues?
    • Even if you’re going through a period when your revenues are falling, that doesn’t necessarily mean your exposures (operating costs) are shifting in the same direction. Keep this in mind if you’re considering reducing your current business income coverage. Learn more about adding coverage to your business income insurance.