Understanding Business Income Protection

During normal operations, a business makes money by providing goods or services to customers. Disruption to those operations can lead to a loss of income that can be financially devastating. For many business operators, business income coverage provides a viable solution to the problem. Consider these three areas if you are deciding about purchasing coverage for your company.

Reasons That Business Income Is Interrupted

There are many reasons that your income may be interrupted; however, not all of them will be covered by an insurance policy. Carefully look at the most likely factors to impact your operations and weigh those against proposed coverage. Some common examples include:

  • Theft or vandalism to your facilities that impact normal business operations
  • Natural disasters that cause structural damage to a building
  • Renovations that are necessary as a result of physical damage to a building

What Income Is Covered By Insurance

Each policy has unique underwriting terms; however, there are two main components of income that are generally covered if a business is unable to operate. These are the lost expected revenue and the continuing expenses that must be paid regardless of the business’s ability to operate.

Policy Provisions To Examine

When you examine coverage, look into exclusions and special provisions that might affect your coverage amounts. For example, many policies have a waiting period between when damage occurs and when the policy will begin paying out.

Income replacement coverage can save a business’ finances if it is forced to close after sustaining damage.