It’s the call you never want to receive as a business owner. A fire swept through your restaurant.
On a personal level, you’re devastated, but you still have to lead your staff through this heart-wrenching disaster. Thankfully, before the disaster you had purchased business interruption insurance so you can at least assure your staff that they can still expect a paycheck.
Business interruption insurance replaces lost revenues, income, and some additional expenses incurred for a covered loss. As an example of an additional expense, say you decide to temporarily relocate your restaurant—business interruption insurance may cover that relocation. The insurance should be part of every business owner’s policy. Here’s why and what you should know about it.
Accounts for what you don’t expect
Business interruption insurance covers many events beyond your control. Maybe that’s a fire or a tornado or earthquake. It’s easy to think that it won’t happen to you, but an estimated 5,600 restaurant fires are reported to U.S. fire departments each year, resulting in $116 million in property damage. No one can expect the unexpected.
Covers lost income and additional expenses
As mentioned earlier, business interruption insurance covers lost revenues and income, which is usually enough of a reason for restaurant owners to ensure they have it. It may also cover relocation if you cannot operate the restaurant in its current location while cleanup is occurring. It may even include utilities if, for example, the electricity is still on while cleanup is occurring but the restaurant is not able to be in operation. Of course, every situation is different and would have to be reviewed by a claims adjuster and would depend on the exact language of the policy, but it’s important to note the options that might be available to you.
Takes into consideration time, quantity and profit
To be clear, like any insurance claim, there are many variables taken into consideration when you make your claim in order to determine how much money you will receive. An adjuster will take into consideration the time lost, the quantity of goods usually sold during this time frame and the value of the goods, or profit. This is why it’s essential that you, as the restaurant owner, keep detailed financial records because the average calculations are often based on documentation from the year prior. It’s also advisable to retain an insurance attorney to help you with your claim.
Adding business interruption insurance to your existing coverage
It’s important to note business interruption insurance typically cannot be purchased on its own. It must be added as a rider to an existing policy. If you do not have it, your carrier may make you wait until the next renewal period. This will depend on each insurance company. When you purchase business interruption insurance, you should:
Understandably, you can’t plan for every disaster that may strike. You can, however, have safeguards in place to protect you as a business owner, your family, your employees and your restaurant’s future.
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