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Hurricanes May Not Trigger Business Interruption
Coverage Unless.......
By: Thomas M Kallman
Business and property owners who dispute the need
for business income coverage also known as business interruption
or loss of rents can learn a valuable lesson from Hurricanes Charley,
Frances, & Ivan although this valuable endorsement will only
apply to losses that first can jump two major hurdles.
Many business owners may have been impacted by one
of these storms, and insurance generally will not cover power outages
caused by failure of a utility, so companies that have been forced
to close due to power outages cannot claim losses because they could
not open for business.
Business interruption insurance typically applies
only to businesses that have suffered physical damage from the storm,
and been forced to close due to the damage. Also, a great majority
of policies in Florida include substantial deductibles in the event
of wind or hail damage, which can range from 2 to 10 percent of
insured values, not a percentage of the damage. Do the math and
you can see that the amount of damage that must first be sustained
is very significant. In some cases the deductible can also be a
waiting period of up to 72 hours.
Companies can buy coverage that covers losses due
to power outages after the business has suffered physical damage
and they can also buy coverage for interruption due to action by
a civil authority that forces them to shut down. But, in reality,
few companies choose to purchase such additional insurance, as the
cost of insuring for them would be a major additional expense for
business owners.
Small business owners, usually with 20 employees or
less, may qualify for a "business owners policy" that
does include some business interruption coverage in addition to
the regular business coverage for fire and liability. While it still
may not cover power outages, if the business suffers physical damage
it will provide salaries for key employees and coverage for actual
lost net income for up to a year. Deductibles do apply as stated
above.
The best advice I can pass on is to discuss your specific
coverage with you own agent now. The time to review your insurance
plan is far in advance of any potential loss.
Please Contact Tom Kallman, President
TMK Risk Management Inc
DBA Kallman Insurance Agency 954-389-5897
www.tmkrisk.com
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