What Should Business Owners Know About Loss of Income Insurance?

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What Should Business Owners Know About Loss of Income Insurance?

By Zuma Insurance Services | January 17, 2018

What Should Business Owners Know About Loss of Income Insurance?

Insurance For Loss Of Income

Two months after rampant wildfires devastated much of California’s wine country, many local business owners are still struggling to envision a viable future. With the greater San Francisco area already dealing with record-high real estate prices, simply finding suitable housing after a major loss can be a nearly insurmountable challenge, and finding the right location to re-open a business may be all but impossible.

But the wide-ranging impact of natural disasters isn’t limited to the Golden State. 2017 marked a record year for “megadisasters” in the U.S., including Hurricanes Harvey and Maria, hitting Texas, Louisiana, and Puerto Rico, tropical storm Irma bombarding Florida, severe flooding affecting many parts of the Midwest, and continuing drought conditions in the upper Plains states.

These scenarios illustrate the crucial importance of business interruption insurance for all business owners, as it can be tough to predict when (and how) disaster may strike your area. Read on to learn more about this unique type of insurance and the benefits it can provide.

What Should Business Owners Know About Loss of Income Insurance?

Types of Business Interruption Insurance

Business interruption insurance can take a number of forms, but in general, is designed to cover financial and physical losses when your business is forced to temporarily close due to factors outside your control.

Not only can this insurance cover the ongoing costs that won’t go away even during a disaster (like property taxes and lease payments), it can help you relocate and set up shop in a new location without going into further debt.

Your coverage choices may depend on many factors specific to your own business. In addition to general business interruption insurance, which works with your general liability coverage to cover any loss of business income and out-of-pocket operating costs you may incur while you’re in a state of limbo, there are some extra riders or supplements you can add.

These options can include:

  • “Dependent property” coverage that protects your business’s earnings if your suppliers are unable to produce certain goods or services or your customers are unable to receive them.
  • “Utility services” coverage can provide additional loss of income insurance coverage if your electric, gas, water, or other public utilities are shut off following a natural disaster.
  • “Civil authority” coverage provides an extra source of income when your business has been forced to close (or customers have been prohibited from physically traveling to it) after the government has issued an evacuation notice.

Who Can Benefit From This Insurance?

insurance against loss of income

If your business is on the small side, whether in its sales volume or physical footprint, you may wonder whether it’s worth it to purchase additional business interruption insurance. But often, small business owners are in the most vulnerable position of all when it comes to outside factors that can force a temporary shut-down.

Mega-corporations are largely able to self-insure against disasters that impact a single store or sales site, while smaller businesses or those that operate from a single location may be without much recourse.

In Closing

  • Loss of income insurance can benefit all businesses but is especially important for those that have a single location (or several locations within the same general area).
  • General liability and property insurance or even federal disaster aid won’t make you “whole” if your business operations are impacted by a natural disaster.

For owners and operators of California-based businesses, business interruption insurance can be among the most important insurance coverages you ever carry. If you’d like to explore your options but aren’t sure where to begin, give Zuma a call at (866) 400-4434 or submit a form on our website today for a free quote. Our experienced agents and operators can work with you to determine the type of coverage that will best work with your business’s unique needs. We will answer any questions you have about loss of income insurance cost, coverage and more.