Interruption of Business Due to Catastrophe

September 7, 2011 at 1:23 pm | Posted in Business Insurance | Leave a comment

Hopefully, you and your business made it out unscathed from Hurricane Irene.  Unfortunately, with the power outages we have been experiencing many businesses are unable to open their doors and food in freezers has been lost to spoilage.

When business operations cannot resume due to damage or access to the property is denied, one of two things may happen:

  1. Business operations cannot resume until the property is restored.
  2. Operations can resume but only by acquiring another location.

Business Interruption Insurance would be helpful in both of these cases, and may be added to your property insurance policy.  Typically, insurance policies require that the property located at the business location be damaged by a “covered cause of loss”, therefore the specific coverages included in your policy should be reviewed and customized during your insurance review with your agent.  A few examples of additional coverages that you may choose to add to your policy would be:

    • Terrorism
    • Property located at another location
    • Utility services coverage, if phone or internet service is disrupted.
    • Dependent coverage, if a business you depend on is damaged.
    • Leasehold interest coverage, for termination of a lease triggered by damage to the business property.

Choosing your coverage limits for the business income coverage requires you to:

  • Project future income and expenses, one year in advance.
  • Identify the maximum length of time it would take you to restore your property.
  • And for extra expense coverage, you would need to determine the extraordinary costs that may be incurred to operate from another location.

Having adequate financial records will be necessary to determine and establish these limits and support any claim under these coverages.

On most policies, you will find a 30 day extension of coverage if a business is still losing income after the property has been restored.  And extensions can be increased up to 730 days for an additional premium.

**It is also important to note a 72 hour waiting period typically applies once the Business Interruption coverage is triggered.

Feel free to contact us with any further questions.  www.nsainsure.com

For more information see the following:

http://www.trustedchoice.com/Content/Articles/Business-Interruption.aspx

http://www.iii.org/individuals/business/basics/interruption/

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