Many companies buy Business Income insurance to help reduce the devastating effect of a loss on their ongoing operations. Although this coverage is extremely valuable and can help keep your business afloat after a loss, bear in mind that it has a number of exclusions.
For example, coverage usually excludes lost income associated with a contract. If the covered loss affects your ability to meet a contract with a third party, the resulting lost income won’t be covered beyond the “period of restoration.” This period usually begins 72 hours after the loss and ends as soon as your property is restored and/or operational.
Let’s say that you sign a contract with customer ABC to supply materials for a year. A month later, your business suffers a major loss to property, including the materials that ABC agreed to buy from you. Because you’ll now be unable to offer these materials for an indefinite term, ABC has no choice but to find the materials elsewhere. Your property is repaired and operational five months later, ending the “period of restoration.” However, because of the exclusion, your policy won’t cover the remaining six months of lost income from losing the contract.
Review your Business Income policy today to learn its period of restoration. There might be an endorsement available to extend the amount of time that your policy will provide coverage. We can help you determine the period that’s right for you. Just give us a call.