Should Your Business Purchase Interruption Insurance?

When a fire destroyed a fifty-unit apartment complex, the owners found themselves in a tough situation. The owners had insurance to cover the repairs and replacement of all the damaged units, and because the agent had done his job the owners had business income or loss of rents insurance.

Business Income coverage is a property coverage that is designed to pay the loss of income (rent is this case) following a total or partial shutdown of business. Business Income is designed to replicate the insured’s income stream and covers expenses as if no loss had occurred.

The 50 families that no longer had a place to live won’t pay rent until they have moved back into their repaired units.  Chances are, many will move on to other housing and won’t come back. However, as owners, you still have expenses, including a mortgage that will need to be paid. There can be three major parts to Business Income insurance:

  1. Business income (BI) coverage: Replaces the lost gross earnings during the shut-down resulting from a covered property loss. Loss of rents is considered gross earnings.
  2. Extra expense coverage: Covers the cost to relocate to another location and continue operations. During relocation, businesses typically incur the extra expenses of rent, equipment lease and the cost of restoring databases. All of this is covered by the “extra expenses” portion of the policy.
  3. Ordinary payroll: This optional coverage continues paying your workforce while you have no work for them. It prevents your trained employees from accepting other jobs while waiting for your business to recover. This coverage is optional but is recommended in many circumstances.

We like to ask the following questions to help us understand your risks and provide realistic solutions:

  • How much income do you need to continue operating your business in the event of a shutdown of your premises?
  • How much time will it take to fully recover or rebuild?
  • Will you need additional coverage for extra expenses such as leasing temporary office space, computer equipment or office machines?

Our team of insurance professionals has the knowledge and experience to help you identify your risks and create cost-effective solutions.

Oakwood is involved with numerous local, state and national insurance associations and communities. The agency encourages employees to devote time to these endeavors. Oakwood’s approach is one of total risk management, encompassing the areas of property & liability insurance, automotive insurance, worker’s compensation, professional liability, individual or group accident & health insurance, life insurance, contract surety bonds, and personal insurance. Oakwood provides an in-depth range of insurance products and services to assist in securing our clients’ future. We are an agency committed to excellence, founded on the principle of integrity.

What Is Trending In Risk Management

Are you concerned about the future? Is your risk management program designed and prepared for changes in pricing, economic downturns, healthcare, changes in employment laws and the upcoming political elections? A broker or agent who cares about your business will be on the forefront of change. Part of providing outstanding customer service is helping clients understand how current and future trends may affect their risk program.

What Is Going On That May Impact Your Risk Program

Increased reliance on technology will lead to better-run insurers and stable premiums. The development of advanced loss control analytic tools will revitalize insurers focus on claim reduction, and potentially lead to increased investments in loss control. Insurers are using business intelligence to leverage “big data” to help them estimate claims, assets, credit and market data, and gain deeper insights across networks of producers, policyholders and operations.

Cyber liability will continue to be a major area of concern for all businesses. The government will continue to legally require a business to protect customer’s information. Those businesses that don’t will be subject to increase fines.

Most insurance companies are moving toward using data to develop commercial insurance premiums. This means your business will need to rely more on your agent. Your agent will be able to help you navigate through the complex maze of insurance program design, marketing, and placement.

Oakwood operates as an independent insurance agency, selling an extensive spectrum of insurance to businesses, families, and individuals.  Our competitive advantage comes from the objective and professional service that we provide our access to a wide range of carriers and our extensive knowledge of the insurance marketplace.