YOU ASK:

Why do I need business income insurance?

WE ANSWER:

If you are a business owner, you must rely on your business personal property to gain profit.

But what if your commercial property suffers physical damage? You will - in all probability - have to spend a few months or more having your property restored or repaired to its original condition, and lose considerable profit that you would otherwise have gained.

The remedy - or better - the prevention comes in the form of business income insurance - a special type of coverage specifically designed to provide financial protection for lost profits and any additional expenses related to the damaged property in the restoration period.

Characteristics of Business Income Insurance

  • The Insurance Services Office (ISO) uses two major forms for business income insurance - business income and extra expense coverage form, and extra expense coverage form.
  • The business income (and extra expense) form covers loss of income coming from retail or services provided by the named insured, and any additional expenses that the named insured may have, pertinent to the functioning of the covered premises.
  • In addition to providing coverage of business income and other extra expenses, business income insurance provides certain other coverages, some of which are listed as follows:
    • If a civil authority is at fault for the direct physical damage to a business property, the business income and extra expenses insurance coverage will pay for the business income lost and any extra expenses.
    • Any necessary additions and alterations to the covered property are also covered by business income insurance.
    • Business income coverage for an extended period is sometimes needed for a business to go back to its normal operations after a restoration period. Business income insurance provides such coverage which lasts for 30 days, or when the business recovers.
  • The extra expense coverage form is for businesses which cannot afford to stop their operations, such as newspapers, banks, etc. The extra expense coverage pays the additional expenses the business owner has incurred while operating after a loss, without the payment of which the business cannot return to normal.
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