How can I prevent my company from going out of business after a disaster?
Business Income
An estimated 43% of all businesses struck by a catastrophe never reopen. If your business suffers a catastrophe, such as a hurricane, how long do you think your business could survive? If your business property were destroyed, your sales and production schedules would be interrupted. Also, if your business is shut down, you would lose income, which would affect your ability to retain employees and pay your continuing expenses. Even if you are fortunate enough to continue your operations, or can minimize the time your business operations are suspended, you would likely incur extra expenses to accomplish this.
Business Income insurance provides coverage for the loss of your net profit, plus any normal expenses that would continue after a covered loss. In short, it is designed to place the business in the same financial position had there been no physical loss or damage to property from a covered loss. Extra Expense insurance covers the necessary cost you incur in order to get your business in working order more quickly.
Deciding how much coverage you need is a critical factor in providing the right protection. Careful consideration of what can realistically happen to a business’ cash flow in the event of the loss is the easiest way to avoid coming up short or reducing your ability to collect if you have a claim. Your agent has the knowledge and the proper tools to analyze your exposure and assist you in determining your unique needs in this regard. Please contact us if you would like more information, including a competitive quote for this valuable coverage.
If you carry business income coverage, the following is a list resources the claims examiner will use to help resolve your claim:
- Profit and Loss Statements
- Income Statements
- Tax records and historical sales records for the previous two accounting years
- Record of extra expenses incurred to resume business operations
- Record of non-continuing expenses
- Other business records needed to substantiate the loss
Some other things that you can do to help resolve your claim include:
- Make sure your accountant is available to meet with the claims examiner
- Maintain accurate records of all expenses after the loss
- Communicate with clients regarding your plans to resume business operations
- Implement reasonable actions to avert or mitigate your loss such as:
Ø Continue partial operations
Ø Rent a temporary facility
Ø Expedite the repairs or replacement of stock and equipment
Ø Outsource some operations
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Note: This is general information and does not change or supersede your policy provisions, which vary
by policy and state.
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