Businesses Need to be Prepared for Anything

The disastrous winter storms should serve as a warning sign to any business owner who does not have business interruption and extra expense insurance.

How would your business continue to operate if your roof collapsed from a massive accumulation of snow? What would it cost to rent temporary space? Could you afford to pay employees for a certain length of time during a work stoppage forced by such a disaster? Could your business afford such expenses?

This kind of loss could wipe out a small business -- unless it has adequate insurance protection.

Yes -- a standard business owners policy (BOP) would cover the cost to repair the roof damage. A BOP also provides liability coverage if someone is injured on your property.

You need to make sure your BOP also includes coverage for business interruption. This would cover a company's operating expenses during any unexpected shutdown. The expenses may include: payroll; production delays caused by damage to a vendor's business; and power outages.

If your office or store is damaged and forced to move to a temporary location, then business interruption insurance may not be enough to cover these expenses. You may need to buy extra expense coverage, which will cover your costs above and beyond your normal operating expenses so you may continue operating at a temporary location. Extra expense coverage will also reimburse for expenses related to relocating.

If you are a landlord and your office building or apartment is damaged to the point where the tenants must move and cannot pay rent, then you need to purchase a type of business interruption coverage called loss of rents.

For the protection of your business, it is wise to purchase both business interruption and extra expense coverage.