What is Business Income?

Business Interruption insurance compensates you for lost income if your company has to vacate the premises due to disaster-related damage that is covered under your property insurance policy, such as a fire. Business interruption insurance covers the profits you would have earned (based on your financial records) had the disaster not occurred. The policy also covers operating expenses, like electricity, that continue even though business activities have come to a temporary halt.

What is Extra Expense?

Extra Expense insurance reimburses your company for a reasonable sum of money that it spends, over and above normal operating expenses, to avoid having to shut down during the restoration period.

Why do I need this coverage?

The goal of this insurance is to “make you whole again”. Purchasing Building and Personal Property insurance returns your location to the same physical condition it was in prior to the loss. Business Income coverage, however, is meant to put you in the same fiscal position you would be in if no loss occurred.
Think of Business Income insurance as protecting the existence of the business itself. To put it another way, if you neglect to purchase Business Income Coverage, the business may simply cease to exist following a prolonged shut down created by a covered cause of loss.
It’s hard to believe, but with the historic focus of property insurance on the prevention of loss and preservation of property, little thought has gone into insurance for post loss recovery. Even more importantly, most insureds that are aware of this key exposure tend to be concerned about covering lost profits, often overlooking the equally important impact of continuing expenses. Continuing expenses can often exceed the insured’s monthly profit.

- Brigham Curran