Business Owners Insurance Part 3: Income Insurance

Posted on Dec 07, 2017

Business Owners Insurance Part 3: Income Insurance

Business owner’s insurance typically consists of three specific types of coverage. One of these is business income insurance. For some businesses facing long-term repairs, essentially a rebuilding of their business, this can be critical for helping to preserve your business during the process.

Understanding a few basics about business income insurance will help you see just how important it is for your business.

What is Business Income (Interruption) Coverage?

Business income insurance offers financial protection for your business from the loss of income that occurs while your business is closed for repairs resulting from a covered loss. For instance, if your business were to be destroyed by a tornado, that is covered by your business owner’s policy (often referred to as a BOP).  Business income coverage replaces a portion of your lost income while you are rebuilding, repairing, or replacing the property that was destroyed by the tornado.

This money allows you to continue paying creditors, employee salaries, taxes, and other expenses even while no income is coming in, and can be crucial for helping you recover after a catastrophic event shuts you down for an extended amount of time. In fact, it can be the difference between having time to rebuild your business and brand after a lengthy closure and going under because of the tornado or another covered event.

It also gives you coverage for expenses associated with setting you up in another location in order to keep your business going.

The bottom line is that expenses do not stop simply because you’ve lost your ability to generate income. You still have utility bills, employee benefits, software licensing fees, creditors, and countless other expenses. Planning to pay these expenses over the long-term if there is uncertainty about when your business will be up and running again can be a financial hardship as well as a mental hardship. One that is unnecessary when you have business income insurance to help you fill the gap.

What Kinds of Events are Covered for Business Income Insurance?

As you would expect, business income insurance is only effective for events that are covered by your business owner’s policy. This does not include events like floods unless you have a flood insurance policy that specifically includes business income protection. It does, however, offer protection for many of the following events if they leave your business closed for an extended period while awaiting repairs:

  • Fire
  • Hail
  • Water damage, except from flood
  • Windstorm
  • Vandalism

When these types of events occur, your business income insurance can be a saving grace that keeps your business from going under during the repair and rebuilding process.

What are the Other Types of Business Owner’s Insurance?

Business income insurance is certainly critical. When you combine it with the other standards of a solid business owner’s policy, you will find that they work together to assist you as your business recovers from a variety of covered events. In addition to business income coverage, your BOP is likely to include general liability insurance and business property insurance. Together these policies cover many of the common events that set businesses back and may cause a great deal of financial hardship.

It is important to remember, though, that these are not the only types of insurance coverage your business might need. In fact, it is unlikely that the standard business owner’s policy is sufficient to meet all your insurance needs – especially if you have employees, provide a service, or use electronic data of any kind in the operation of your business – including accepting payments via credit card.

The real question you need to ask yourself, as a business owner, is how much insurance coverage do I need? For that, it is almost always best to work with an independent insurance agency that understands the local landscape and business climate. Whether you are a small or medium-sized business or a multi-national corporation, getting the right type and amount of insurance coverage is an essential part of your business plan so that your business is poised for growth and not facing unnecessary risks and exposures due to insufficient insurance protection.

Otterstedt Insurance Agency has been serving the business and residential insurance needs of people in New Jersey and yonder since 1919. We believe in helping people rather than selling policies and are here to help you with all your business income insurance coverage questions and concerns. Call us today at 201-227-1800 to learn about your business insurance needs and get the insurance protection your business deserves.

 

View Parts 1 and 2:

Business Owners Insurance Part 1: Property Damage Coverage
Business Owners Insurance Part 2: General Liability Coverage Client

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