Are you planning to launch a startup? If so, make sure you know about business income insurance coverage. It pays your company when it's unable to operate due to a disaster. Here's a look at what you should know about this coverage that can keep your business afloat after an unforeseen event.
The term "business income insurance coverage" is also commonly referred to as "business interruption insurance." This coverage pays for lost income during downtime when the property undergoes repair. Since a shutdown can interrupt revenue streams, your business will be covered for lost revenue until it reopens.
Business interruption coverage is included in a Business Owner's Policy (BOP), which combines general liability with commercial property insurance. A BOP plan, just like a standard business policy, can be adjusted with coverage extensions to account for operational changes.
Not only does a business income policy cover employee wages, but it can also further cover the mortgage, rent, and loan bills, as well as tax payments.
The restoration period begins as soon as your commercial property is forced to shut down after a disaster damages it. The period ends once the damage is fixed and the establishment is ready to reopen. You will need to check your policy to see when coverage goes into effect to pay for losses.
Remember that business income coverage pays for loss of income, not physical damage to the property or equipment, which is covered by a separate commercial property policy. Business income coverage did not apply to the pandemic, but it will apply to specific disasters mentioned in the policy. Exclusions listed in the policy explain specific events that are not covered, such as bad weather.
Any business with a physical location, staff, and stored production equipment should consider business income coverage. A business that typically purchases this coverage is a software company that relies on local computers to generate profits. If the computers are damaged, the employees cannot do their work, which is why they are entitled to a payout.
First, you need a standard business insurance or BOP policy. Then it would help if you discussed your business with an insurance expert who can share coverage options that might fit your enterprise. You can customize coverage based on your company size.
If your business depends on certain employees who cannot work, business income insurance can pay for losses due to your labor shortfall.
Your business can also get a coverage payout if it depends on a third party unable to perform responsibilities. The coverage pays for losses resulting from a lack of service from a partner, supplier, or vendor.
We are dedicated to helping you find the right insurance coverage for your business needs. Our experts will be happy to discuss your options and what works best for protecting your specific assets. If you are launching a startup and want to know more about business income insurance coverage, contact our team at Little & Sons Insurance Services.
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