When your New York business property is destroyed due to a catastrophe such as a fire or natural disaster, most standard business insurance policies will cover only losses or damages to tangible items such as your equipment, inventory, store, office and warehouse. The profits lost and the expenses incurred while your doors are closed and you are rebuilding the business may not be covered. Adding business interruption insurance to your policy can help to alleviate these costs. Given the fact that the number of natural disasters has risen from 400 to 600 incidents per year, this is a coverage that is well worth looking into. The premium dollars spent upfront may help to keep your business financially solid while you are rebuilding.
There are several different types of business interruption coverage that New York business owners should consider. The following is a brief explanation of each.
Business Income Coverage – This will cover lost income and the payment of continuing expenses while your property is being restored and business operations are ceased. In order to choose a limit for this coverage, you must project income and expenses for the next year. It is important that you keep accurate and up to date financial records in order to determine what your lost profits would be. Calculate costs that will continue such as loan payments and taxes. Note what expenses may cease such as utility services to the destroyed property.
Extra Expense Coverage – This will cover the costs incurred if you are able to move to and operate your business from a different location while you are rebuilding.
Contingent Business Coverage – If your business is affected by an explosion at your website host’s server site or a key supplier cannot deliver if they are wiped out by a natural disaster such as a hurricane or tornado, this coverage may help recover lost profits. This type of business interruption insurance is important if you are dependent upon another company to maintain your daily operations.
Utility Services Coverage –This will cover profits lost if utilities such as the phone lines and internet are down for an expanded period of time causing a loss of income to your business. It will also cover losses incurred if a major supplier suffers a power outage causing a disruption to your business operations.
Dependent Property Coverage – This type of business interruption insurance may have helped if you were a lower Manhattan restaurant that got 80% of its lunch business from the World Trade Center. This same coverage could also apply if a major supplier you depend upon for products or services is shut down for an extended period of time due to a loss or catastrophe. You must specifically identify by location, ahead of time, the premises that you are dependent upon.
Leasehold Interest Coverage – This was specifically designed to recover much of the loss that can result due to the termination of a favorable lease triggered by damage to the business premises.
Civil Authority Coverage – This coverage will help if your company has a loss of income because you and/or your customers are denied access to your business premises by civil authorities.
An independent insurance agent like Berkely Brokerage Corp. will help you to decide what type of business interruption insurance you need to protect your New York company against lost profits. We know the right questions to ask so that we can advise you properly. While it may seem confusing at first, let us explain the various options to you. You will be thankful should the day come when your business is shut down due to a major loss or catastrophe and you are looking at lost profits and continuing expenses. We will also explain to you the type of records you will need to keep, should you need to file a claim. Give us a call today to answer any questions you may have. You will be glad you did.