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Don't be in the dark about business interruption coverage

Mar 16 2012

 Wayne Texeira  Marketing Director, CFMP

On the evening of Tuesday, March 13, I was in Boston to attend a play. I sat down in my seat at 7:30 pm and, snap! – the lights went out. No…it wasn’t the show starting; it was a major power outage in Boston’s Back Bay area caused by a transformer fire.

News coverage over the past few days has focused on the losses of businesses located in the affected area. Think of the impact this had on the area. Restaurants, salons, retail shops and other businesses were forced to shut down. Power outage is a concern for every business and can cause substantial loss of product and revenue. Beyond power outages, businesses are vulnerable to fire and other weather related disasters that can stop business operations for an extended time period.

One way to limit potential financial losses is through business interruption and extra expense insurance. Business interruption (aka business income) insurance covers lost income due to a covered loss that prevents your business from operating. Extra expense insurance reimburses your company for a reasonable sum of money that it spends, over and above normal operating expenses, to avoid having to shut down during the restoration period.

Most polices have a waiting period before coverage kicks in. Waiting periods and covered causes of loss vary among policies. It’s important for businesses owners to review their policy closely to understand what is and what is not covered.

Talking with a licensed insurance professional can help you determine if business interruption insurance and extra expense insurance are appropriate for your business. While business interruption insurance may not cover every instance of closure, not having coverage can be crippling. It’s not uncommon for a business to close permanently because they were unprepared for an unexpected closure and revenue loss. 

Learn more about business interruption insurance

 

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