Business Income provides money for lost income due to a loss. Many companies overlook this coverage as an "extra" when this is one of the most important coverages.
Things to consider if you have a total loss and have to rebuild:
- The time it takes to settle with the insurance company (0-3 months)
- How long it will take to get permits to rebuild (6-12 months)
- The actual time of construction, including delays (6-24 months)
Make sure that you have a good amount of coverage in this area if you depend on your place of business to create your income. Look at the average time to get a permit in your area as well as the actual time of construction.
Other things to consider:
- Waiting period - When something happens to your income, you want to be compensated from the moment. Make sure there is no waiting period, this is worth the extra few bucks.
- Choose "Actual Loss Sustained" instead of a set number or percentage of income. This way you get reimbursed all your expenses throughout the period of the loss.
- Dependent Properties - Are you subcontracting your production to a local factory. What if they have a loss and you don't have an alternative supplier? What if the store next door burns down, but passage to your store is blocked?
- Extra Expense - This coverage will pay you the difference between the income after the loss and before the loss. It may take you 6 months to a year to get back to your prior income.
- Make sure your books and sales figures are accurate. If you are used to making overly conservative estimates on your sales figures in order to pay a cheaper premium, this may come back to bite you. Business income is often based on a percentage of sales.
Photo Credit & Caption: Firemen standing at the burnt out shell of the Harley Davidson business in Blacktown.Photo: Dallas Kilponen