What You Need to Know about Business Income Coverage
Commercial property insurance provides coverage to repair or restore the physical damages caused by accidents including fire, windstorm, and vandalism.
Often times, it is difficult for businesses to operate while the damages are being repaired.
Business income coverage is a type of commercial property insurance that provides coverage for a business’s loss of income due to a slowdown or suspension of normal operation due to direct physical property damage.
Most business income coverage has components called “extra expense insurance” and “extended business income” coverage. The extra expense is used to expedite the restoration period. For example, additional costs caused by expediting delivery of supplies to reduce the restoration period will be covered under extra expense. Extended business income coverage is used to protect against a loss of business income that continues during a certain period after a business has resumed operations.
Usually, business income coverage has the maximum period of restoration up to 12 months, and the standard waiting period until the coverage goes in effect is 72 hours. To make it easier to understand, if a business experiences 7 days of business income loss, a standard coverage will cover only the 4 days of the 7 days.
Even though many business coverages automatically include extra expense and extended business income coverages, some do not, and the policyholders have to manually choose to buy the coverage. An additional premium may incur from manually adding the coverage. However, we would like to emphasize how important it is to carry comprehensive coverage to protect you and your business from an unexpected, unfortunate incident.
As conditions and exclusions apply to all types of insurance, there is a list of excluded causes of loss for business income as well.
We recommend getting a professional’s help when choosing the perfect insurance policy for you and your business.