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Business Income Insurance

Business burned out income coverageBusiness income insurance, can be complicated, but it is incredibly important to protecting your business.

What would you do if your daily business was suddenly interrupted? Do you think you can rely on your commercial insurance to help cover your loss? Unfortunately, you might not be as covered as you think.

Business income, or business income insurance, is a semi-complicated endorsement but one that is incredibly important to protecting your business. By definition, business income insurance is covering loss of income suffered by a business when damage to its premises by a covered cause of loss causes a slowdown or suspension of its operations. Coverage typically applies to loss suffered during the time required to repair or replace the damaged property. Determining the appropriate coverage for business income will require your agent to really understand your business and its day-to-day operations. In order to recommend the appropriate coverage, the business income is calculated as follows:

  • Net income + continuing expenses (this is done on an annual basis)
  • Determining how long the business would be out of business if a claim occurred
    • Generally, agents will recommend six months of coverage at a minimum because 30-90 days goes much quicker than people realize

The endorsement of business income is complex, as is finding the appropriate coverage for your business. Utilizing the above formula helps your agent recommend the appropriate coverage.

In addition to the formula above, your agent may ask you some pointed questions to aide in finding the best coverage.

  • How long would it take to get your business up and running after a loss?
  • If you rent, how well protected is your building?
  • Are sprinkler systems up to date and functional?
  • Is comparable commercial space readily available in our area, or would it take weeks to find a suitable location?

There are many scenarios that come to mind when business income insurance helps protect against lost income due to unforeseeable circumstances. As an example, let’s say a fire has left the building unfit to do business in and destroys most all merchandise before it was able to be shipped to customers…business income insurance may help cover your losses in the following ways:

  1. For lost income from the destroyed merchandise
  2. For extra expenses if you must relocate your business temporarily

One piece of information to keep in mind is that property coverage would help pay to repair the damage building if you own the building.

As illustrated above, there are varying factors that need to be considered before business income insurance should be purchased. There are also additional coverage options that exist and can be customized based on the individual company’s needs. To learn more about business income insurance or to discuss coverages that would be appropriate for your organization, please contact a Ramey King agent to discuss protecting your business today!

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