BUSINESS INCOME/EXTRA EXPENSE INSURANCE

Does your insurance include Business Income?  Surveys indicate that the vast majority of businesses which sustain major insured losses to their premises and which do not carry Business Income coverage go out of business. 

In the event of an interruption to your normal operations from an insured occurrence, would you be likely to incur abnormal expenses (advertising, temporary clerical, temporary utilities, moving, etc.)?  If so, Extra Expense insurance is available for such exposures. 

If the reconstruction of the building involved upgrading its characteristics to comply with current Building Codes, the reconstruction may take longer than would be required were your building to be reconstructed without those upgrades.  Your Business Income insurance benefit would cease at such time as the building could have been re-built without upgrades.  For the incremental time needed to re-build in compliance with current Building Codes, Increased Period of Restoration coverage is available as an enhancement to your Business Income insurance. 

If you (a) provide a preponderance of your services to any one business, (b) have a preponderance of services provided to you by any one firm, (c) sell a preponderance of product to any one firm or (d) buy a preponderance of goods from any one firm, the inability of that firm to operate because of a fire or other insurable circumstance could significantly impair your ability to earn normal income.  This exposure can be covered by adding Contingent (or Dependent) Business Income insurance to your program. 

Your Business Income benefit would cease at such time as your property is restored to the point that normal operations could be resumed.  Were profits to be depressed for a period of time thereafter owing to a lead-time which would occur between the resumption of operations and the receipt of normal income therefrom, such continuing loss could be insured by Extended Period of Indemnity coverage as an enhancement to your Business Income insurance. 

Many “All Risk” Business Income insurance policy forms contain an exclusion for Business Income losses resulting as a consequence of damage to the premises that first occurs to an outside source of water, communications and/or power.  This exclusion can be eliminated by providing “Utility Services Consequential Damage” coverage (form #CP0418). 

If you are a Landlord and if you would sustain a loss in rental income as the result of an insurable event occurring in the rented premises and your subsequent ability to rent the affected space at a lower rental income than you are currently receiving (because the current tenant is paying an above-market rent), this loss of rental income can be covered by Leasehold Interest insurance (form #CP0060). 

If you are a Tenant and if you would sustain incremental rental expense as the result of an insurable event occurring in the rented premises and your subsequently having to rent alternative space at a higher rental income than you are currently paying (because you are now paying a below-market rent), this incremental rental expense can be covered by Leasehold Interest insurance (form #CP0060). 

Your Business Income insurance may be written on an Agreed Value basis, so as to eliminate the possibility of your becoming a coinsurer.  Many insurers require that, in order to activate the Agreed Value provision, a Business Income Worksheet needs to be filed with them.  Has this been done?