So, I have adequate insurance to rebuild in the event of a disaster. Overnight, the building burns to the ground and after calling my insurance agent. He tells me that we are covered and we are insured to full value. Once a contractor is assigned, the debris is removed, plans are developed and permits selected they should be able to begin work in about six months and the construction process will last eight to twelve months.
Well, that is good news but what are you supposed to do while you are waiting for your building to be replaced? You can’t just shut down your business or you won’t have a business to come back to when your building is completed.
This important form of insurance is called “Loss of Use” or " Business Income " and involves loss of income and can also involve the extra expense of moving your operation temporarily to another location. You still have bills to pay, employee wages to maintain and the cost of setting up your practice in another building. The shear financial extent of replacing your equipment and moving your practice alone could close your business and yet “Loss of Use” is one of the least understood and neglected forms of insurance.
With good reason you should be concerned about adequate protection for the replacement of your building and your business personal property however it is essential that you have adequate insurance coverage to keep your business going after a catastrophe. When I review the policies of potential clients this is where I find potential gaps in coverage.
How much money will the insurance company give you to keep your operations going after a loss? If you don’t know you need to check because it probably won’t be 100%. I have seen policies that range from 50% to 100% of income and time elements from just a few months to as long as two years. And, what if your policy does not include the extra expense of moving your business to a new location? Can you afford to do that on your own?
This topic alone should be a subject for you and your insurance agent to meet and discuss. It is critical that you have access to the resources to keep your business going in the event of a loss and by discussing the options with your agent you can determine the premium that it will take to cover you up to 100% of your current income and every option less than that.
This is a big deal, please take the time now to review and discuss your options. If you are not getting the answers you are looking for give us a call and we would be happy to discuss with you.