BUSINESS INCOME INSURANCE
Don’t Overlook Business
Income Insurance
C
an your business survive
without a regular stream of
income—say if a fire, hurricane,
theft or other catastrophe
damaged your facility and
brought your operations to a halt? These
catastrophes do happen from time to time
so it’s a good idea to arm yourself with the
right type of insurance.
Most businesses have insurance to
cover their buildings and other physical
property, but they need to go a step
further to really get the full protection
they need. “Business income” or “business
interruption” insurance will cover a
company’s ongoing expenses if operations
are suspended for a covered reason,
resulting in sharply decreased income.
Business income insurance covers your net
income and continuing normal operating
expenses —in addition to necessary
extra expenses that may result from the
catastrophe, such as temporary relocation
or rental costs. Any damage to the facility
itself is covered separately by your property
insurance.
Business income insurance is also a “must
have” if your business depends on the
continuing operation of another business
to survive—say, a key supplier of goods,
a major customer or an anchor store in
a shopping mall where you are located.
Collectively, these businesses are known as
dependent properties because your income
stream could be significantly reduced by
the shutdown or significant disruption
of another’s operations that you depend
on. The last thing you want is for you to
lose income due to the loss or damage to
6
a dependent property that is out of your
control.
One thing to remember when considering
business income insurance is that if a
qualifying event forces your business
to close down operations temporarily,
you will still be responsible for covering
continuing normal operating expenses—
which may include employee payroll, rent,
mortgage interest payments, insurance,
property tax and utilities. Business
income insurance would not only help
you meet these obligations, but also cover
any extra expenses that help you avoid
or minimize down time and expedite the
repair or replacement of damaged property.
6) How long would it take to build your
business back up to normal following a
temporary closure?
7) How would business income coverage
dovetail with your existing property
coverage?
8) What are reasonable coverage amounts
to obtain?
For more information about business
income insurance, contact Atlas Insurance
at (808) 533-3222. +
FINDING THE RIGHT COVERAGE
Keep in mind that business income and
interruption coverage can differ widely
among carriers, depending on the options
that are available so be sure to research
your options and consult with your
independent agent for advice. Here are
some questions to consider in selecting the
right coverage options for your business:
1) How susceptible is your business to loss
from fire, windstorm; and other perils?
2) How replaceable is your inventory?
3) How long would it take to get your
business up-and-running again after a
loss?
4) How available are comparable buildings
and equipment if relocation is necessary?
5) Will your workforce still be available to
you if you need to release and then rehire
them?
BY: RICHARD H. FUKEDA, CIC, MLIS,
SENIOR VICE PRESIDENT,
ATLAS INSURANCE AGENCY
Richard Fukeda joined Atlas Insurance
Agency in August 1995 as the supervisor of
their Large Commercial Accounts unit. He
later served as Operations Director. Richard
also oversaw a unit of commercial lines
Account Managers; and has worked on a
number of large accounts. He provides
assistance with coverage reviews, coverage
analysis, policy reviews, and on proposals
for some of the larger accounts. Richard is
currently involved with technical insurance
training for the internal staff, producers and
Account Executives.