Business Income Coverage: Do You Have It?
Pop quiz. What is business income coverage? I’ll let you off easy and give you the definition right off the bat. Business income is insurance intended to help in the case a business suffers a loss when damages to its premises cause a slow down or complete stoppage of the operation. Coverage applies while damaged property that caused the business interruption is repaired or replaced. This coverage often times consists of the loss in net income, as well as the necessary expenses incurred that wouldn’t have been subjected had there been no loss.
When people think of business income, many think of lost income at a brick-and-mortar location, such as a retail store, restaurant, or even a manufacturing plant (hence the words “to its premises” I mentioned above). They might also think about the loss of revenue and extra expense it takes to get their business back up and running after a loss. Another concern might be their employees and their well-being and compensation in the event of an interruption in daily operations.
But, what about businesses that don’t have a fixed location they operate from? There are many other types of businesses out there that are “on-the-go” daily and their income doesn’t come from a fixed location per se. Think of contractors with large equipment, trucking operations, delivery businesses, moving companies, and many, many more. Business income can be one key coverage that doesn’t always follow them around to the extent other coverages do.
For purposes of this blog, I’d like to specifically focus on how a business income loss can be tied to a large piece of mobile equipment and a larger auto that is used in daily operations. Many different types of operations are mobile in nature and have a variety of activities that are performed at different locations daily.
Today, it’s common for many insureds with an “on-the-move” type of mobile business to insure their autos on an auto policy and equipment on an inland marine policy. It’s also common for business income to be an afterthought on these lines of insurance.
Some clients have a large concentration of trucks or equipment or commercial trucks (mainly truck tractors). Examples would be delivery vehicles, truckers, or contractors with large critical equipment that is used on job sites. What would happen to your operation if a tornado or fire wiped out the entire fleet of trucks or equipment? Is there a large fleet of rentals available immediately? If you lost a critical piece of equipment that might have even been customized to your operation, is there a rental nearby you could access quickly?
Do you have business income coverage for the lost income you would incur as you replace the equipment or fleet? The answer is usually, “it depends.” Equipment covered on a property policy MIGHT have coverage. Have you thought about whether your equipment that is scheduled on an Inland Marine policy is covered in the event you have a business interruption? What about your larger commercial autos that are a critical part of your daily operations and might even be the direct source of revenue?
According to a 2017 report by Allianz, business interruption is the top risk identified as the top worry by 37 percent of respondents in a risk barometer survey. That is the 5th consecutive year it was identified as the top risk.
We have knowledgeable producers and staff who are here to review your current coverages, even on coverages that aren’t as widely addressed such as business income on your auto and mobile equipment. In the past few years, many new options have improved to address mobile business exposures. We have producers and carrier partners with the ability to tailor coverage you need to your business, and sufficient business income coverage is one of many things we consider when analyzing your insurance program. Reach out to us and let us know how we can help!
Published on: 02.21.19