As Hawaii’s Kilauea volcano continues to erupt, homeowners and businesses face an ongoing threat to their properties. In addition to potential property damage, businesses also have the risk of their business operations being interrupted as the result of loss to their property.
Property insurance can cover businesses from the various forms of loss they face. Business owners may want to consider also purchasing business interruption coverage in addition to their property coverage to protect if a loss occurs. Business interruption coverage is not sold alone, but it can be added on to the property insurance policy.
Business interruption coverage can cover a business’s loss of profits and continuing expenses that occur due to a covered loss. Example of continuing expenses are payroll and loan expenses. Business interruption coverage typically covers:
- Profits – the insured may be covered for profits that would have been earned had the damage not occurred;
- Fixed costs – the policy may provide coverage for costs still being incurred by the business after the loss, including operating expenses and other related costs;
- Temporary location – the policyholder may be covered for the costs incurred while moving to and operating from a temporary location;
- Commission & training cost – this coverage applies when the insured incurs costs while training employees to operate machinery replaced by the carrier after a loss;
- Extra expenses – the insured may be covered for reasonable expenses incurred while operating the business while the damage is being repaired. Extra expense coverage also provides indemnification for costs incurred by the policyholder while mitigating the business interruption loss;
- Ingress/egress – the policy may provide coverage if the government mandates that the business close and the mandate directly causes a loss of revenue.
Business owners should explore all coverage options available to them; there are many components of running a business that could easily be affected by a loss. A thorough insurance policy could help lessen the burden on a business owner when disaster strikes.