If you have a covered property loss and your business is forced to close temporarily, business income coverage can help you:
- Replace lost net income
- Pay for continuing expenses, such as mortgage, advertising, taxes and payroll
- Pay for relocation expenses and advertising fees if you set up shop at a temporary site
Business income insurance works in conjunction with your property policy and provides coverage for events beyond your control such as fire, wind, hail, vandalism or damage from vehicles or aircraft that may interrupt your business. Flood, earthquake or glass breakage are typically not covered in a business income policy.
Options and endorsements
In addition to basic coverage, which is essentially earnings insurance or reimbursement insurance, there are different options and endorsements to provide additional coverage.
Extra expense coverage
Extra expense insurance covers expenses above and beyond normal operating costs incurred if your company is temporarily shut down. Depending on your type of business, extra expense insurance by itself can sometimes provide sufficient coverage.
Dependent property coverage provides earnings insurance if:
- Your suppliers are unable to produce goods or services on which your business depends
- Your customers are unable to receive your company’s goods or services
- Companies that manufacture products for direct delivery to your customers can no longer fulfill orders
- A company in your immediate vicinity which is responsible for attracting customers to you (known as a leader location) goes out of business or can no longer attract business
A utility services option provides coverage if there is disruption of basic utilities, such as electric, gas or water provided by public or private utility companies that prevents your business from operating, resulting in a loss of income.
Civil authority coverage provides income if your business is forced to closed – or access to your business is prevented – due to an act of civil authority, such as an evacuation or disaster.