When Hurricane Sandy hit the East Coast in October 2012, it destroyed automobiles, homes, boats, and businesses in its wake. Damages are estimated at $50 billion and climbing. The immediate obvious loss was from flooding and property damage but there is a great deal more than meets the eye for businesses that were hit hard by the storm.
Many businesses – especially in coastal areas – shut down, unable to operate, and while they had property insurance to cover the physical damage to their building and contents, many find themselves uninsured when it came to loss of profits and extra expenses while their operation was shuttered. What’s more, utility power outages caused others to close their doors while municipalities worked hard to restore electricity, etc. Again, they were hit with loss of income while their doors were closed.
This is why Business Interruption or Business Income insurance is so critical. It will pay up to a specific amount of loss of income due to an insured loss. The coverage kicks in after a certain waiting period and is for a specific period of time. There are many other important stipulations in a Business Interruption policy, which is why it’s critical to review the coverages ins and outs and options with an independent insurance agent.
Additionally, Service Interruption is available, which provides coverage for losses that the policyholder incurs from interruption of utility services that result from physical damage to the property that supplies the utility. Property policies often provide this coverage, although they may require that the interruption of service last a minimum amount of time. The coverage may be subject to separate and lower limits of insurance than other business interruption coverages. Service Interruption coverage can vary widely with regard to what types of utilities are covered, and should be reviewed again with an independent insurance agent.