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Business Interruption Insurance


Your broker should be able explain your coverage benefits. The issuer of your policy or its agent should be able to do the same. Any of them may have a website that explains your business interruption benefits.




business interruption insurance



Your business interruption insurance policy should list or describe the types of events it covers. Events that are not listed on, or not described in, the policy are typically not covered. It is important to review the policy exclusions, coverage limits, and applicable deductibles. You should also determine if the policy requires your business interruption to last for a certain time period before you are entitled to any policy benefits.


Business interruption coverage typically can only be triggered if you have property loss that leads to the business interruption. One example could be that a fire in your office has caused you to suspend your business activities.


It is possible to have business interruption coverage under another type of insurance policy. For example, there may be available coverage in policies that cover perils arising out of actions by civil authorities or interruption of your supply chain. Business interruption coverage may also be part of a package of multiple coverages that have been combined or are contained in a Special Multi-Peril or Business Owners policy.


You should contact your broker to obtain an explanation of related coverage in other types of policies you may hold. Any insurer or its agent whose policy you purchased should explain whether it provides business interruption coverage.


It is unlikely that a current business interruption policy has contemplated the coronavirus specifically. However, you should check to see if your policy has an exclusion that would disable coverage for an incident triggered by an epidemic or pandemic, which might apply as the COVID-19 situation evolves. Also, any claim would still need to be related to your property damage for coverage to be triggered.


Insurers typically do not write coverage for events that have already occurred. In addition, authorized insurers may be reluctant to write insurance when the extent of potential damage is not easily understood, although it may be possible to insure specialty risks in the excess line market. You should discuss any potential insurance purchase with a licensed insurance producer.


As a result, the LDI reviewed the policy forms of seven admitted insurers offering business interruption coverage in Louisiana, as well as the policy forms of the Insurance Services Office (ISO) and the American Association of Insurance Services (AAIS), in order to answer the FAQ below. Those forms constitute the majority of business interruption policies in our state. Please note the LDI does not receive or approve forms from surplus lines insurers.


The price of the policy can also vary depending on your location. For example, if the business is in an area with a higher risk of hurricanes, the cost of business income (interruption) insurance may increase. A restaurant might have higher premiums than a real estate agency, for example, because of the greater risk of fire. Also, a real estate agency can more easily operate out of another location.


Provides insurance coverage in the event the damage or destruction of non-owned property reduces or terminates the business owner's earnings. With COVID-19 disrupting global supply chains and sales, businesses are losing income and incurring additional expenses as a result of the interruption.


Business income (interruption) insurance can also include extra expense, which will cover anything beyond the normal day-to-day operating expenses that are necessary to keep a business solvent. Instances of extra expenses include:


Civil authority coverage extends business income (interruption) and/or extra expense coverage. Even when a government order prohibits or otherwise specifically restricts access to an insured premise, the policy may still require a direct physical loss before triggering coverage.


The cost of business interruption insurance depends on how much coverage you need. To determine how much coverage you need, imagine a worst-case scenario, such as a fire that completely destroys your building and all of its contents.


Business interruption insurance works in conjunction with your commercial property insurance. For instance, if your business suffers a fire, your commercial property insurance would cover the physical damages and the business interruption insurance would cover the lost net income.


Besides a fire, other examples of covered events include wind, hail, vandalism or damage to your building or equipment. Closures caused by flood, earthquakes or broken glass typically are not covered in a business interruption policy.


Business income is defined as net income (profit or loss) the owner would have earned if normal operations had continued. The insurance company will determine this based on past financial records.


Example: A café has been destroyed due to a tornado. The business owner can re-open the café temporarily in another building three weeks after the storm and resume business there until the original building is repaired or replaced. Business income coverage would pay any profits the owner would have made during the three-week period he was unable to operate the café, any ongoing expenses he has such as mortgage payments, payroll, satellite TV bills, etc.


Rental value is much like business income coverage for owners of rental property. It covers the anticipated rental income a landlord would have received from tenants during normal operations. It also includes any other charges the landlord normally transferred to the tenants for payment, such as trash pickup or cable television.


Extra expense coverage reimburses a business owner for extra expenses paid because of the storm. It allows the business owner to continue operations at a new location and be covered for the additional expenses that go along with it. There is usually no waiting period to begin collecting extra expense coverage after a loss.


Your insurance company, in consultation with you, will determine how long you qualify for payments under your business interruption coverage. This period of time is known as a period of restoration. The period of restoration ends as soon as the business can resume normal operations.


If the policy expires during the period of restoration, the coverage does not cease but continues until the property has been repaired or replaced and the insured can resume normal business operation.


Many disputes arise between insurance companies and business owners over how long the period of restoration should last. In these cases, owners should talk with their insurance agent, their insurance company or file a complaint with the Department of Insurance.


So whether your global challenge comes from automotive manufacturing, pharmaceuticals, telecommunications or another complex property insurance exposure, we can support you across all of your operations.


Whether you're a specialized SME or Mid-Corporate operating in domestic markets or a multinational giant, your business may need to respond to a wide range of crisis scenarios at a moment's notice, often with the immediate threat of major impact on your operations, reputation, and revenue.


Businesses across Missouri have been impacted by closures and losses related to the COVID-19 public health crisis. One common question is the extent to which insurance may cover any losses businesses experience as a result of COVID-19. In order to help address questions related to business interruption insurance coverage, the Missouri Department of Commerce and Insurance compiled a list of Frequently Asked Questions.


Business interruption insurance helps replace the lost income and other expenses if a business is forced to temporarily shut down due to a covered peril that affects its commercial property. Covered perils typically include natural disasters such as fire, wind, or lightning, as well as theft and falling objects.


Business interruption insurance (also called business income coverage) is typically bundled together with general liability and property insurance into a Business Owners Policy. However, it can also be purchased under a more comprehensive, dedicated property insurance policy.


Extra expenses coverage is often confused with business interruption insurance because it is often purchased along with business interruption insurance. However, the two policies cover different types of things.


Deciding to move your business to another location and reopening while you wait for your regular location to be repaired is one of the most common examples in which an extra expenses policy would help.


If you run a type of business that can be relocated easily, extra expenses insurance can help you to continue making money at a temporary location while you are waiting for your permanent location to reopen.


Another type of business interruption and extra expenses insurance that exists is called contingent insurance. This type of insurance protects you in the case that one of your key partners is forced to close down operations.


Contingent business interruption insurance would pay for lost profits and wages until their property is restored. Contingency extra expenses insurance would pay expenses that would enable you to continue your operations with another partner until your old one is ready to return to action.


This coverage is crucial for any company that relies on its physical locations and assets (equipment, machinery, or buildings) to conduct its operations. This includes businesses such as brick and mortar retail stores, restaurants, or cosmetic salons that need their physical locations to generate revenue.


Additionally, businesses based in locations that have been historically exposed to extreme weather patterns or natural perils should look to secure their peace of mind with the right business interruption coverage, regardless of industry. 041b061a72


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