If your business gets whacked by severe weather, take heart. According to the Insurance Information Institute (III), a standard business-owners policy, called a BOP, provides coverage for a wide range of weather-related disasters, such as burst pipes, wind and rain damage, and damage to buildings caused by heavy ice and snow, among others.
Business owners who suffer damage due to power outages may also look to their property-insurance coverage or a type of business insurance called a “boiler and machinery” policy (which actually covers all kinds of items) to recover losses. These policies may even cover personal effects of yours and your employees up to the policy limit (usually $2,500), but only if you’ve added “Personal Effects and Property of Others” coverage to your policy. This coverage does not include theft, however, even if theft is a covered cause of loss under the policy.
If there’s physical damage to your place of business and it affects your ability to be open, business income (also known as business interruption) insurance will come into play – if you have that kind of coverage.
“Small-business owners should aim to have sufficient policy limits to cover the company for more than a few days,” said Loretta Worters, a vice president at III. “When there’s a problem, it often takes more time than most people think to get a business back on track. And there is generally a 48-hour waiting period before business interruption coverage kicks in.”
If you have “extra income” coverage as part of a business-interruption policy, you’ll be reimbursed for any money you spend over and above normal operating expenses in order to avoid shutting down while your business recovers.
And some types of business interruption insurance don’t stop with your business alone. According to Worters, even if your business isn’t affected by a weather disaster, but your suppliers or customers are, you could be protected with “contingent business-interruption” insurance.
“Small companies today are more heavily dependent that ever on materials and services from key suppliers. If one of those vendors can’t deliver, contingent business interruption insurance will help,” said Worters. •
Daniel Kehrer can be reached at editor@business.com.
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