If local businesses weren’t already familiar with business interruption insurance, they probably wished they had been after Hurricane Irma swept through the area.
“Business interruption insurance is an under-purchased item,” says Richard R. “Bob” Rosier, president of Rosier Insurance, which has locations in Bonita Springs and Sanibel. “But every business should consider it as part of their overall disaster- response program. It’s just a good coverage to have.”
When there’s a hurricane, fire or other disaster, property, fire, or flood insurance covers the physical damage to a business’s property. But business interruption insurance covers the loss of income that a business experiences after a disaster. So if your restaurant or manufacturing facility has to shut down while disaster-related repairs are being made to your property, business interruption insurance helps cover the revenue that’s being lost.
Think you might want to add this coverage to your insurance plan? Rosier offers some key things to consider when it comes to business interruption insurance.
TALK TO YOUR ACCOUNTANT. Get a true picture of your business’s annual profits, losses and expenses to help determine how much business interruption coverage to purchase and what the payouts would be should a disaster strike. “The big misconception is that you can get X number of dollars per month no mat- ter what,” says Rosier. “But you actually have to prove those numbers.”
A business’s financial situation will determine the amount and kinds of business interruption cover- age needed. “You can pay $75 to $10,000 for it,” says Rosier. “Every situation is different. The first thing is to figure out how much you really need in order to get things done correctly. The higher the need, the higher the cost.”
DECIDE ON THE LENGTH OF COVERAGE YOU WANT TO PURCHASE. Often it’s available for periods of time like three, six or 12 months. Rosier tends to opt for longer lengths of coverage just to be safe.
INCLUDE YOUR EMPLOYEES IN YOUR PLAN.
Business interruption insurance typically covers a company’s lost profits and the ongoing expenses that continue to have to be paid whether the business is operational or not. Rosier recommends that clients should also include ordinary payroll in their coverage.
“One of the most difficult things to do in our area is to find good help,” he says. “So if your business suffers a loss, you don’t want to lose your staff, because they’re one of your greatest assets.”
CONSIDER OUT-OF-THE-ORDINARY SCENARIOS.
Coverage can also be added for things that are “over and above” a business’s normal operating expenses. That could be situations like a need to temporarily relocate your business to a spot where the rent is higher or the hiring of additional staff to help get things back up and running.
THINK ABOUT YOUR SUPPLIERS.
If you depend on another company for parts or services required for your business to function, devise a plan for what happens if they have to shut down. “All of a sudden you’d no longer have a component of what you’re doing,” says Rosier. “Where are you going to get that from? You need to also think in terms of contingent business income. Maybe you have someone who does fulfillment for you. If that place goes up in smoke, you can’t just go and replace them within a week. It takes time to get stuff done, and you’d have lost income during that period of time.”
PAY ATTENTION TO THE DETAILS.
Know what your exclusions are. And understand that it can often take up to 72 hours for a business interruption policy to kick in. “Once you’ve satisfied the waiting period, the coverage is not retroactive,” says Rosier. “You’ve got to read the policy. The old saying goes that the devil’s in the details. But it’s also located in the fine print.”
