Business Income Coverage or Business Interruption has been thrust into the spotlight as a result of the COVID-19 Pandemic.
So what is Business Income Insurance?
Business Income Insurance is simply an insurance coverage that pays for the “net income that would have been earned or incurred” and “continuing normal operating expenses incurred, including payroll” as a result of the business not being able to conduct normal business operations because of a covered loss.
Imagine if a clothing store had a sprinkler system burst damaging all of the inventory and equipment and the business had to shut down for three months as a result to get everything put back together.
That business would presumably still have expenses such as rent, utilities, licenses, fees, etc. The business also has employees that are now out of work and will look for other employment if they are not being paid. You also have the owner of the business or investors that now do not get any income from the business.
Business Income Insurance comes in to address all of this. It pays for the continuing bills, payroll, and Net Income to make it like the loss never happened. The goal of all insurance is to put the business back to where it was before the accident happened.
This coverage is not automatically included in property policies and has to be purchased separately. For many small businesses though, it is often included in their Business Owners Insurance Policies.
Does your business have Business Income Insurance?