If you suffered a catastrophic loss today, your business interruption insurance will reimburse you for what you the revenues would have earned without the event, minus what you did earn, up to the amount of the policy. However, if you set this amount too high, you could wind up “over-insured” – and paying a higher premium than you need to.
To make sure that you’re in the “Goldilocks Zone” (with neither too much nor too little coverage) when it comes time to renew your business interruption insurance, estimate the revenue stream you’ll need to protect during the policy period by ask such question as:
1. Has the market for your products or services changed significantly since you last bought coverage?
2. What do you see as the impact of expected economic or market conditions on your projected revenues – for example, by raising or lowering prices to meet competition.
3. If you have any new products or services for which there is little or no sales history, check how similar products or services from your competitors are performing. Be sure to include any unique advantages that you, or they, might have (for example, technological innovation).
4. Do you have any contracts or advance orders to support a revenue forecast that differs significantly from industry trends?
5. Have you made recent changes to operations or facilities – such as a new plant, restructured management or marketing campaign – and you expect to increase sales?
The risk management professionals at our agency stand ready to help you answer these questions so that you can protect your projected revenue stream with a comprehensive business interruption policy tailored to your needs. Just give us a call at any time.