If you are a business owner, regardless of the size of your company, buying business income insurance is an essential type of coverage you need to consider to prevent a disaster from causing your business severe financial stress. While so many businesses buy fire insurance, they fail to evaluate the importance of business income coverage, and its ability to help that transitional period between the event occurring and the business is ready to re-open its doors.
Is business income insurance the same as business interruption insurance?
Although different insurance companies will use both terms interchangeably, when you buy business income insurance, it is essentially the same type of policy as business interruption insurance. They will both cover the loss of income that a company suffers from after a covered event occurs.
Also see: Business Interruption Insurance
Business income insurance is not the same as commercial property insurance, although it is often offered in combination with this type of coverage, or as part of an overall business owners policy package.
What is business income coverage?
If you buy business income insurance, it can help your company to pay its bills and cover payroll should your company be forced to close temporarily following a covered event, such as a fire or a natural disaster.
The purpose of buying this insurance is to help your business through the transitional period between a covered event occurring and your operations getting back to ‘business as usual.’
What does a business income policy cover?
There are lots of different things that business income insurance can help you with should you be unable to open following a covered event. It can help you replace any lost income while you are unable to operate, along with paying for the regular operational expenditure of the company, including loan payments and payroll expenses. If you need to relocate your business to a temporary location, then this type of coverage can also help with those costs, as well.
It works alongside your commercial property insurance to give your business the best type of financial protection should you suffer from events that are outside of your control, and which impact the usual operations of your business.
Is flooding covered under a business income insurance policy?
Flooding and earthquakes as part of a business income policy and the same rules generally apply to your commercial property insurance too. It’s essential to check the precise event that is covered with your commercial insurance agent. If you want additional protection from earthquakes or flooding, then you might be able to extend your policy terms to include these perils for an additional premium.
Although there will be some insurance companies that will not be able to extend coverage for flooding, speaking with your local commercial insurance agent as you get quotes for business insurance is a great way to find out who will and who will not cover these perils.
What is business income extra expense insurance?
If your business has to shut down temporarily due to property damage or a physical loss at your main business premises, business income extra expense coverage will cover the expenses you incur in order to avoid or reduce the likelihood of you having to suspend your company operations.
What is the waiting period for business income?
The industry standard waiting period for business income insurance to apply is 3 days or 72 hours. However, extra expense coverage will begin immediately after the damage or destruction of your property takes place.
Getting a Quote for Business Income Insurance
You cannot get a standalone quote to buy business income insurance for your company, as it can only be purchased as an add-on to another commercial insurance product. If you would like to see a breakdown of how much the business income insurance costs, the best way to do this is to speak with a commercial insurance expert. They can provide you with a quote for commercial insurance with and without this add-on.
When you decide whether or not to buy business income insurance, you should always consider how you will cope financially, and how you will meet the costs of your monthly operational expenses without this insurance.