It’s hard to forget the fear, panic and aftermath of Hurricane Irma last year. And it’s hard to believe that we are already approaching another hurricane season here in Florida. Unfortunately, Floridians might not get much reprieve. Forecasters and meteorologists are predicting an above average number of hurricanes in 2018.
With this in mind Florida businesses must be prepared and have a plan to protect their employees, property and cash flow. Business owners often ask me about Business Interruption Insurance (BI) and how it can help protect their business. BI coverage is a critical part of a company’s ability to stay afloat if they suffer a loss because of a Hurricane. It can make the difference between recovering from a loss, and being forced to cut operations or go out of business.
Here are 5 key things to understand and look for when reviewing your Business Interruption coverages.
- Business Interruption coverage, unless endorsed, will only respond to a loss if there is property damage at the property insured.Additionally, traditional BI coverage doesn’t cover income lost if the shutdown is caused by a flood.
- Understand the time deductible.Most business interruption coverage comes with a waiting period, usually 72 hours.This is the number of hours after a covered physical loss that must pass before the business interruption coverage will kick in to start paying anything.Some business interruption policies may have the option of waiving the waiting period, or decreasing the number of hours.
- Offsite Utility Interruption Coverage.Coverage can be expanded, by endorsement on certain policies, to include income lost because of power outages that occur away from the insured property.For example, perhaps your business was spared from any property damage, but your utility company wasn’t so lucky. This coverage can protect your company if you aren’t able to resume normal operations because of offsite utility interruption.
- Contingent business interruption coverage might make sense for your business.Some companies depend on third parties to operate.If you are a manufacturing company you might rely on another business for tooling, or shipping.If there is damage caused to a third party that you utilize, it might affect your operations and cause a loss of income.Contingent business interruption coverage can be an added layer of protection.
- Complete a Business Income Worksheet once a year with your insurance advisor.Trying to piece together what the loss is after the fact is daunting and you might not have the correct limits.Every year review your BI worksheet and have the copies of the correct documents (bank statements, payroll, tax returns, profit and loss statements etc…) on file in case of a claim.
Hurricane season in Florida is right around the corner. There are many ways businesses can protect themselves through a combination of internal preparedness and investing in comprehensive insurance. Take the time now to speak to your insurance advisor about your coverages, especially Business Interruption Coverage. You may be glad you did.