When you own your own business, anything can happen. A big storm can take off your roof. A natural disaster can flood the area and force your business to shut down. A fire might destroy your inventory. As a responsible business owner, you’ve purchased business insurance on your property, inventory, and equipment.
Your insurance coverage will help you rebuild and get back to business. But what will you do for income while you wait? How will you pay your employees, the mortgage or rent on your property, or yourself? You’re a small business with a single location and a few employees. When your doors are closed, your income stops. “Loss of income” insurance helps you pay the bills while you repair and rebuild after a claim.
WHAT IS LOSS OF INCOME INSURANCE?
Just because your business is shut down from a fire or other covered peril doesn’t mean that your responsibilities stop. Also known as business income coverage, “loss of income” coverage pays for specific types of financial loss you may experience as a result of damage or theft:
- Lost net income
- Continuing expenses like payroll, taxes, mortgage, and advertising
- Relocation expenses and advertising costs if you set up a temporary location
Loss of income insurance works in conjunction with your commercial property insurance policy. If the damage is covered by a covered peril, loss of income coverage kicks in. Keep in mind, you have to have filed a claim for the initial property damage before you can file a claim for loss of income.
ADDITIONAL COVERAGE IS AVAILABLE
Not every possible situation is included in a business income coverage policy. There are several incidents that may be rare but could result in a serious loss of income for your business. When considering loss of income insurance, talk to your agent about these add-ons.
Extra expense coverage: This provides income for expenses that are above and beyond your normal operating costs.
Utility coverage: This provides income if you unexpectedly lose utility services like water, gas, or electricity that forces your business to close and lose income.
Civil authority: If customers lose access to your business or if you are forced to close due to civil authority like an evacuation during a disaster, this will cover your lost income during that time.
Dependent property: When other entities that you rely on for business are unable to provide goods, services, or customers, your lost income is covered. This includes certain scenarios:
- Suppliers are unable to provide goods or services to you.
- Customers are unable to receive your goods or services.
- Your manufacturer is unable to fulfill direct orders for your customers.
- The leader location that provides traffic to your business no longer attracts customers or goes out of business. Example: An anchor store in a shopping center
If you can protect your business property with insurance, why shouldn’t you cover your income, too? Not every business can rely on other locations to keep bringing in money to make up a temporary closure. You still have bills to pay when a fire or disaster shuts your doors. Use loss of income insurance to keep yourself and your employees going until you can open up again.
Here at Charlotte Insurance, we take pride in helping our fellow small business owners protect what you’ve worked so hard to build. Give us a call and let’s talk about how to make sure your income doesn’t dry up after a major disaster.