Business income coverage protects your business from financial income loss that is encountered. It covers the time from when your business is unable to operate as a result of a covered loss. Business income coverage may be necessary when your business suffers either a total or partial loss of income from property damage. This generally includes loss of Business Income and Extra Expense Loss.
Business income is basically defined as net income plus continuing operating expenses. Extra Expense generally means necessary expenses sustained to minimize the length of time your business cannot operate.
Restoration Period
The period of restoration is the time period in which theses coverages apply. The period of restoration commences when the covered damages force your business to suspend its operations. Th restoration period ends when the covered damage is or could have been repaired. Also, there is Extended Business Income coverage that continues after the restoration period and ends as written into the policy. All of the above coverages could be involved during a loss depending upon your particular situation. Below is an example of how these coverages might apply to your business in a loss situation.
Let’s say you own a bakery called My Bakery. Let’s assume it sustains a fire loss that causes damage to both their building and equipment. Furthermore, let’s assume you are out of business for three months. Your losses for the building and equipment would be covered under the property insurance.
Business Income coverage would provide protection from financial loss during that period. It would compensate you for lost profits and continuing operating expenses during that time period.
Operating Off Site
In the event your business were operating off site to continue the operations then the Extra Expense coverage would assist. This coverage would assist with the extra expenses incurred due to off-site operations.
The Extended Business income would protect you from the loss of Business Income between a designated time period. It would cover the time between resuming operations and the end of the restoration period.
Call your FAPCO agent to learn more about business income coverage for your business.