Insurance 101 – Business Income CoverageInsurance 101 – Business Income Coverage


Complete Video Transcript

0:04Owning your own business can be a rewarding experience. There are many perks to being
0:08your own boss, but there are also many responsibilities. Your employees, your customers, and your vendors
0:14all rely on you to keep your business operational. Let’s say your manufacturing business suffers
0:19a fire. Your building and its contents are a total loss. Without a building, your employees
0:24are unable to return to work. Without your employees, sales orders go unfulfilled. When
0:30they don’t receive their orders, customers resort to taking their business elsewhere.
0:34While it may only take a few months to rebuild or establish your business elsewhere, the
0:38loss of income during that time could take months or even years to recoup. This is where
0:43Business Income Coverage becomes critically important to a business owner. First, let’s
0:48define Business Income Coverage. Business Income Coverage covers the business income
0:52lost when your business operations are suspended due to a direct physical loss of property
0:57on your premises resulting from a covered cause of loss. Unless all three of these requirements
1:02are met, Business Income coverage will not apply. Business Income Coverage is sometimes
1:06called Time Element Coverage because it provides coverage for loss of business income over
1:11a specific time span called the Period of Restoration. The Period of Restoration begins
1:1672 hours after the loss, and ends when either the business is rebuilt or resumes at another
1:21location. For example, we noted earlier your business has suffered a fire. It happens on
1:26a Saturday afternoon and causes extensive damage. However, you are able gather enough
1:31stock to reopen your business at another temporary location on Monday. Because it has not yet
1:36been 72 hours since your loss, you have not yet entered the Period of Restoration, so
1:41you would not be covered for any income lost on Saturday and Sunday. There are two types
1:46of Business Income Coverage: with extra expense and without extra expense. Business income
1:52with extra expense coverage helps pay for extra expenses you incur to keep your business
1:57operational after a loss caused by a covered peril. This coverage kicks in immediately
2:02after the loss occurs and can cover expenses such as moving costs, renting temporary premises,
2:07and renting or purchasing temporary equipment that does not replace equipment which is already
2:11part of your inventory. So in our fire example, while you would not recover the lost income
2:16from Saturday and Sunday, you would be reimbursed for the moving expenses because they will
2:21allow you to be operational while you rebuild your business. The second type of Business
2:26Income coverage -without extra expense – does not include coverage for extra expenses
2:30incurred to keep your business operational after the loss, leaving you to cover those
2:35expenses. For businesses that require more specialized coverage options, there are several
2:40coverage add-ons available to help meet your needs. These include changing the period of
2:44restoration, extending the length of time you can receive benefits from the Business
2:48Income policy (called the Period of Indemnity), or limiting or excluding payroll expense of
2:54your employees. Sometimes, a business may suffer an income loss involving a unique set
2:59of circumstances that are excluded on the Business Income policy. Endorsements are available
3:04to help you address situations such as a delay in rebuilding due to an ordinance or law,
3:09or a disruption in utility services. Your independent insurance agent can help you determine
3:14which coverages are right for you. Contact them today about the vital protection Business
3:19Income Coverage provides to help your business recover after a loss.