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What is Business Interruption Insurance?
The financial effects that disasters have on California businesses can last long beyond when an event actually occurs. When a business can’t fully resume operations or suffers another prolonged revenue loss, payment from business interruption insurance may be especially helpful.
Business interruption insurance is specialized commercial property insurance, but it generally doesn’t pay to replace damaged property like many other property policies do. Instead, business interruption often supplements revenue when operations are inhibited by damaged or destroyed assets.
Because business interruption is such a specialized coverage, businesses should work closely with an insurance agent who knows the insurance well. An agent who specializes in this coverage will be able to provide informed guidance as to coverage and policy selection.
What businesses in California should carry Business Income Insurance?
Whenever a prolonged revenue loss would dramatically strain a business, business income insurance might be helpful. This, of course, includes many different businesses in California. Almost every business should at least consider the coverage.
A few particular examples of businesses that may want business income coverage include:
- Hotels and Motels: May take months to rebuild after a major disaster
- Restaurants and Bars: May experience decreased customer traffic for a while after a disaster
- Manufacturers and Distributors: May have no inventory in stock to sell after a disaster
- Resorts: May miss out on an entire peak season after an unfortunately timed disaster
What sorts of disasters does Business Income Insurance cover?
The incidents that business income policies cover are determined by the specific language of a policy. Depending on terms, a policy might cover smoke, fire, wind, lightning, theft, vandalism and other perils that property coverages commonly extend to.
An insurance agent who specializes in business income coverage can help businesses make sure their chosen policy protects against a range of perils.
Are changing market conditions covered by Business Income Insurance?
Business income policies may protect against a wide range of disasters, but changing market conditions generally aren’t one of them. Poor management, increased competition, changing trends and other similar issues normally don’t fall within the scope of a policy’s protections.
Instead, business income policies primarily protect against certain physical perils
How long do payments made by Business Income Policies last?
How long business income payments last largely depends on what type of policy is purchased. There are three main types:
- Standard Business Interruption Coverage: Payments normally last until the insured business reopens
- Extended Business Interruption Coverage: Payments normally last beyond reopening, for a defined period (e.g. 30, 60, 90 days)
- Contingent Business Interruption Coverage: Payment protection normally extends to disruptions that suppliers experience
Can Business Income Coverage be purchased alongside other coverages?
Business income coverage can be bought on its own, but it’s more frequently purchased through a package policy. Both business owners policies and commercial package policies usually offer the coverage.
How can California businesses get Business Interruption Insurance?
For assistance with business interruption insurance, contact the independent insurance agents at Heffernan Walton Insurance. Our agents can explore various scenarios with you, and make sure you find a policy that protects against the situations your California business is most likely to face.