Automotive Specialty Insurance
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Business Interruption

 

Business interruption insurance (also known as business income insurance) covers the loss of income that a business suffers after a disaster while its facility is being rebuilt. This vital coverage forms a part of a property insurance policy and is only triggered when the business suffers a physical damage to the business like a fire. The expectation is that the profit of a business is protected by the business income coverage should the business be interrupted by a covered property loss. This extra policy provision is applicable to all types of businesses, as it is designed to put a business in the same financial position it would have been in if no loss had occurred. In other words provide the profit a company would have earned if it wasn’t for the loss.

Business income protection is not sold as a stand-alone policy, but can be added on to the business' property insurance policy or comprehensive package policy.

The following outline reflects the typical coverage under a business interruption insurance policy:

     

  • Profits- Profits that would have been earned (based on prior months' financial statements);  
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  • Fixed Costs- Operating expenses and other costs still being incurred by the property (based on historical costs);
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  • Temporary Location- Some policies cover the extra expenses for moving to, and operating from, a temporary location;  
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  • Extra Expenses- Reimbursement for reasonable expenses (beyond the fixed costs) that allow the business to continue operation while the property is being repaired.  
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This coverage extends until the end of the business interruption period, which is determined by the insurance company. Most insurance policies define this period as starting on the date of the covered peril and the damaged property is physically repaired and returned to operations under the same condition that existed prior to the disaster.

The SEIA program affords Business Income protection and stands poised to assist in securing coverage upon request. A Business Income Worksheet can be completed to assist in evaluating how much coverage should be considered which forms the maximum limit the policy will afford post loss.

Please do not hesitate to inquire into the assorted Property and Casualty programs available to manufacturers, distributors and installers of auto parts nationwide through the SEIA program. All of which can afford business income protection.

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