Don’t Forget About Loss Of Income Coverage

By Tom Franzen, CIC, ARM,
Association Risk Management Consultant

We would never consider not placing insurance coverage on our buildings, business personal property and vehicles. We would not open our doors or sell a single product without workers compensation coverage and products liability coverage, many of us even feel much more comfortable having employment related practices coverage in place for our day to day dealings with employees.

Why do we often overlook perhaps one of the most important coverages available, business income?

Studies have shown over and over again that most businesses do not fail after a large loss because they don’t have enough coverage on a building or personal property or because they have too little liability coverage. They fail because they are unable to survive without adequate cash flow!

This is where business income coverage comes in. Coverage can be purchased using a variety of forms to cover your loss of income during a “covered loss”. You can extend the coverage to include your “extra expense” after that loss, expenses that would not normally occur without the loss and even business income from a contributing location outside the coverage territory. Have you heard about the earthquake and tsunami in Japan and manufacturers that are closing or limiting operations because they can’t get parts from Northern Japan?

Be sure to talk to a trusted agent or broker as forms can vary, there are many ISO forms that provide business income, extra expense, business income from dependent properties, and a very important add on, utility services time element coverage. All must be triggered by a “covered cause of loss”, so be an informed buyer!

The Association’s Endorsed Service provider, Sentry Insurance, has many excellent forms available including the forms noted above as well as contingent business income. To learn more about the program with Sentry, contact Bob Bonifas at bob.bonifas@sentry.com.

Don’t miss this critical coverage when you do your next review with your agent! ◆