Risk & Business Magazine General Insurance Services Fall 2019 | Page 26

CATASTROPHIC LOSS
Would Your Business Survive A Catastrophic Loss?
C
ontinuity is critical in
business, and there are few
things more important than
continuous revenue and cash
flow, particularly for small- to
medium-sized organizations. In fact, just
one brief business interruption can be
incredibly costly for an organization, often
leading to serious reputational damages or
long-term closures.
If you think about it, there are several
local examples of businesses that faced
unfortunate circumstances. Nearly two
years ago, Colonial Cleaners faced a
structural fire that affected many of the
businesses in Thornapple Plaza on US 30
in Valparaiso. More recently, Allure on the
Lake in Chesterton faced a devastating fire
that left many couples without a wedding
venue.
It’s easy to talk about insurance in the
abstract, thinking “That won’t happen to
me.” However, incidents like these—ones
that happen close to home—are a reminder
that anything can happen unexpectedly.
That’s where business interruption
insurance can help. This form of coverage
provides protection against a variety
of common interruptions, including
natural disasters, equipment damage, and
vandalism.
CLAIMS SCENARIO: YOU’RE FIRED
The company: A small, family-owned bagel
shop.
The challenge: Following a recent fire, a
bagel shop experienced major property
damage. Not only were substantial repairs
needed, but the company lost crucial
baking equipment.
Repairs for the damaged property and
equipment were expected to take three
months to complete—a significant amount
of lost time and revenue.
Business interruption insurance in action:
Following a covered disruption, business
interruption insurance can help businesses
of all sizes stay afloat and recover quickly.
This is because business interruption
insurance can reimburse income that
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• RELOCATION - In the event that your
primary location is unusable following
a disaster or other event, you will
likely have to relocate in order to
remain open and continue generating
revenue. Business interruption
insurance can cover the expenses of
moving your business to a temporary
location and may include both moving
and rent costs.
• EMPLOYEE WAGES - If you are unable
to operate, it is likely you will not be
able to continue paying employees.
Business interruption insurance can
help you avoid losing staff while you’re
closed by ensuring that you make
payroll.
• In addition, because the lot was flooded,
the dealership had to move its operations
to a new location. This, in turn, meant
the dealership had to sign a new lease and
cover steep moving expenses. LOAN PAYMENTS - If you have an
outstanding loan, you will need to
continue to make payments even if
your business isn’t fully operational.
Business interruption insurance will
ensure you never miss a payment until
you are fully operational again.
Business interruption insurance in
action: In the face of a disaster or other
disruptions, organizations may be forced
to move to temporary locations in order to
remain open. Without the proper policy,
organizations would have to pay for these
costs out of pocket. Business interruption insurance is
designed to give businesses access to the
assets they need when they need them
most. However, these policies can be
complex, and it’s important to work with
your insurance broker closely when seeking
coverage.
organizations would have received had
they been able to operate.
This was particularly important for the
bagel shop, as paying for costly repairs and
not having a steady flow of income could
have bankrupted the business. With the
right policy, organizations can take the
necessary steps to get back up and running,
all without sacrificing day-to-day income.
CLAIMS SCENARIO: RELOCATION,
RELOCATION, RELOCATION
The company: A mid-sized auto dealership.
The challenge: After a night of severe
flooding, a number of area businesses
experienced substantial water damage. Of
these businesses, an auto dealership was
hit the hardest, losing the majority of its
inventory.
Thankfully, business interruption
insurance can reimburse organizations for
all of the costs associated with a move.
BENEFITS OF BUSINESS INTERRUPTION
INSURANCE
•
•
REVENUE - In the event of a
disruption, business interruption
insurance provides coverage for
income your business would have
earned during a closure period if it
had been operating normally.
RENT OR LEASE PAYMENTS - Even if
your premises are unusable following
a disaster or other event, many leases
still require that you make payments.
Business interruption insurance
allows you to continue making rent
or lease payments, even while your
business is not operating.
BY: ALISON WILLIAMS
COMMERICAL ACCOUNT EXECUTIVE,
GENERAL INSURANCE SERVICES
Born and raised in Chesterton, Alison
Williams joined the GIS team in 2016
where she specializes in commercial
insurance. She is a volunteer with
Porter County Court-Appointed Special
Advocates, and in her spare time, she
enjoys spending time with friends
and family, beach days, and musical
performances.