While not sold as a separate form of insurance in and of itself, business interruption insurance coverage is a common rider on many comprehensive policies. This allows for a given package to cover more than just general liabilities, such as property damage that can occur in face of a natural disaster or unexpected event.
However, in the age of coronavirus, business owners are now looking to their insurance policies to see if it can help them cover the cost of lost income, reduced hours, and the myriad of challenges they face during the pandemic.
Unfortunately, there are limitations to all insurance plans. Do you qualify for compensation? Keep reading to Find out more.
There Must Be Physical Damage
A main tenant of business interruption insurance is physical damage. Furthermore, it must be shown that the physical damage itself was the main cause for necessary interruptions in the business. For most policies, if this element is not present, coverage is not triggered.
If you believe this is limiting, you are correct. The origin has to do, coincidentally, with another virus.
Since the SARS pandemic, insurance companies have been careful about the wording in their policies specifically to exclude coverage caused by viruses and bacteria. This is due to the general fragility of the insurance industry as a whole— should too many claims be paid out at once, there is the risk of serious financial destabilization and even bankruptcy.
What Does Business Interruption Insurance Cover?
If your policy does qualify you for business interruption insurance, there are several types of damages for which you can seek compensation. These include the following:
Profit Loss
Profit loss is calculated by comparing your average monthly earnings before the interruption to your average monthly earnings after the interruptions. Generally, you can seek compensation for the resultant difference in those two numbers.
Temporary Location Coverage
For businesses that have to move to a temporary location during a period of restoration, the cost associated with such an accommodation is sometimes covered.
Civil Authority Coverage
Commonly included as part of a commercial property insurance plan, this type of coverage protects your business against loss relating to government closure orders. Similar to property damage, you must be able to show your business losses were a direct result of these mandates.
Employee Wages
This offers coverage for employee payroll to maintain staff during a period where there is little to no income revenue to support payments.
Fixed Costs
This is reimbursement for operating expenses of running your business. Depending on your industry, what these costs include will vary greatly.
Extra Expense Coverage
This is added reimbursement for costs that may not otherwise fall into the “fixed costs” category.
It must be noted that not all policies are the same and, as such, my yield different levels of coverage for some of the options listed above.
There is More Than One Type of Insurance Coverage
Finally, there is one more type of insurance coverage some individuals can potentially use for help cover losses. This is known as contingent business interruption insurance.
Unlike regular BI insurance, contingent plans relate to losses covered due to third party instability. Common third parties for this type of claim are suppliers, as if they did not fulfill their obligation, those who contract with them would suffer a financial loss.
Insurance Experts of Arizona
One of the only ways to know what your policy covers is to review your specific plan. This can help you understand whether you are experiencing a covered event in addition to make insurance adjustments going forward.
We know that finding the right insurance policy is difficult, especially with the vast number of policies there are to choose from. This is why it’s important to work with an insurance specialist who is knowledgeable about the market and who can guide you to the best policy for your situation.
At the Gebhardt Insurance Group, we offer a variety of coverage from a host of major insurance carriers with an experienced staff that can help you determine the coverage you need. We can help everyone from individuals looking for a basic health policy to families, persons with pre-existing conditions, and even those who are looking to purchase life insurance.
If you have any questions, give us a call at 520-836-3244 to get a quote and make an appointment to take the final steps in insuring your business.