Business Income, do you have it?

If a fire or other covered loss damages your building enough that you have to stop doing business, how are you going to recover from the lost income? How are you going to pay your key employees, so they don't go to the competition? How will you pay your fixed expenses like your loans, mortgages, and leases?

Business Income provides money for lost income due to a loss. Many companies overlook this coverage as an "extra" when this is one of the most important coverages.

Things to consider if you have a total loss and have to rebuild:

• The time it takes to settle with the insurance company (0-3 months)
• How long it will take to get permits to rebuild (6-12 months)
• The actual time of construction, including delays (6-24 months)

Total time can be from 12-39 months before you are back in business. Most business owners policies offer around 12 months. Other property packages may leave off this coverage in order to show a cheaper overall price.

Make sure that you have a good amount of coverage in this area if you depend on your place of business to create your income. Look at the average time to get a permit in your area as well as the actual time of construction.


Other things to consider:

• Waiting period - When something happens to your income, you want to be compensated from the moment. Make sure there is no waiting period, this is worth the extra few bucks.

• Choose "Actual Loss Sustained" instead of a set number or percentage of income. This way you get reimbursed all your expenses throughout the period of the loss.


• Dependent Properties - Are you subcontracting your production to a local factory. What if they have a loss and you don't have an alternative supplier? What if the store next door burns down, but passage to your store is blocked?


• Extra Expense - This coverage will pay you the difference between the income after the loss and before the loss. It may take you 6 months to a year to get back to your prior income.

• Make sure your books and sales figures are accurate. If you are used to making overly conservative estimates on your sales figures in order to pay a cheaper premium, this may come back to bite you. Business income is often based on a percentage of sales.

Photo Credit & Caption: Firemen standing at the burnt out shell of the Harley Davidson business in Blacktown.Photo: Dallas Kilponen