Business Insurance for assets, income

So there you are, happily operating your business, knowing life is grand, when — BLAM — a car crashes through the side of your building. You’re going to have to shut down for substantial repairs. How are you going to pay your rent, your bills, your employees, more importantly, yourself? You need Business Interruption insurance.

BI coverage pays for all your continuing expenses while you are closed and for your normal monthly profit. Unbelievable? It’s true!

BI covers you when you are closed because of fire, theft, vandalism, lightning, hurricane, cars hitting buildings (it has happened a number of times on Kaua‘i), and a host of other causes, depending upon your policy.

Imagine how much more easily you will breathe knowing you’ll still have money coming in while you are rebuilding your store or office.

Here are five tips for buying Business Interruption insurance in Hawai‘i.

Know if you’ve got it

Some policies automatically include business interruption coverage; some don’t. Some cover loss of income after a hurricane; some exclude hurricanes. Note: Most flood insurance policies can’t include BI coverage, so if you are at risk to be submerged by a tsunami, start banking money now.

Buy enough

Add up your monthly rent or mortgage, your own salary, key employees’ payroll, insurance (of course), telephone, electricity, advertising and more; plus your normal monthly profit. Multiply the total figure by the number of months you want coverage for. How long would you be closed if a fire burned your store? How about if a hurricane leveled the building? Expect repairs to take longer after a hurricane because contractors and building materials will be at a premium.

Avoid coinsurance

at all costs!

Business Interruption coinsurance clauses are tricky. Avoid these complicated formulas that determine if you have underinsured — and the corresponding slashing of your coverage when you need it most — by asking your agent for either a “no coinsurance” clause or a “monthly limit of indemnity.”

Reopen in comfort

Most policies automatically provide 30 days of “extended period of indemnity” after you reopen, paying you the difference between your old income and your new, while your clientele is retraining themselves to shop with you again. You can extend this time frame to 60, 90, 120 days or longer.

Talk with your agent

The ins and outs of Business Interruption insurance coverage could fill four newspaper columns. Every business’ needs are different. Take the time to talk with your agent to learn how Business Interruption insurance will cover your assets.

• For business insurance questions you’d like answered in this column, email Pamela V. Brown at pbrown@insurancefactors.com. Pam has been helping people with insurance for nearly 30 years and writes coverage for Hawai‘i businesses. For more info, call 821-8899, 651-3533 or visit www.kauaibusinessinsurance.com.

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