Business Interruption Features in a Business Owners Policy (BOP)
September 30, 2009
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By: Brandon Sutkowi
If your business' physical location is critical to your ability to produce revenue, then business interruption insurance is imperative. Businesses most affected by this kind of loss include retail, wholesale and manufacturing businesses.
Business interruption insurance is designed to cover the loss of income resulting from a disruption or halt to normal, day-to-day business operations caused by damage to your property.
Extra Expense Insurance:
An important consideration regarding business interruption is the additional expenses--those beyond actual loss of income--that you may incur if you have to move your business as a result of property damage. In order to maintain operations and service your customers, you might incur expenses of renting temporary premises or equipment.
In a standard BOP, Business Income and Extra Expense coverage applies to actual loss sustained during the period of restoration, but for no longer than twelve consecutive months after the date of physical loss of damage.
Extended Period of Indemnity:
BOP policies cover losses incurred only up to the point that you can reopen your doors for business. But that isn't always where losses end. Just because a business opens again does not mean revenues will immediately jump back to normal level. Some policies may provide an additional 30 days of business income coverage after restoration of property. Business owners should consider endorsements or other policies to provide coverage for these situations.
In some situations, small retailers can suffer business income losses stemming from acts of civil authorities. Damage to nearby properties can cause civil authorities to restrict access to a given area, thus barring you and your customers from your store. Many BOPs provide three weeks of business income and extra expense coverage when access is prohibited by action of civil authorities.
The brevity of this article prevents comprehensive consideration of all issues. The information contained herein should not be considered as insurance advice; such is expressly disclaimed. For specific matters, consult with your insurance agent.
Brandon Sutkowi, Personal Lines Manager
Meadowbrook Insurance Agency
I invite your questions and feedback
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