New Jersey business interruption coverage, or a business income policy, is valuable insurance coverage for all business owners. Not having this vital policy in place is the main reason many businesses do not reopen after a serious loss.
Business owners that may have been hesitant to purchase this service may want to reconsider business interruption (BI) insurance given the rising number of natural disasters in recent years. This coverage helps a business owner to recover in their most dire time of need by providing insurance protection for lost rents, as well as loss of income and sales during a period when the business is unexpectedly forced to close.
Understanding how the coverage works
Start by carefully noting which types of interruptions you wish to cover. Your BI coverage will generally mirror what you have covered in your main business policy. For example, if you didn’t include flood coverage in your general policy, you won’t have interruption coverage for flooding, either.
If you have a company that is quickly growing, you need to document many months of profits in order to demonstrate that income is accelerating. That way, if you suffer from some type of an interruption, this will allow you to project the amount of income that would have continued to grow. And if you want to keep workers on the payroll during the rebuilding process of your factory or store, your insurance will reimburse you for their salaries.
Your business will likely be at risk when related businesses are affected by disaster. For instance, a key supplier may be unable to deliver their goods to you if it’s wiped out in a major storm. These events will typically hurt your financial results even though your facility remains undamaged. Contingent business insurance covers your lost profits in these disaster scenarios.
Note that loss of utilities is often excluded from standard interruption policies, especially downed electric transmission lines, so if you want that covered you’ll need to add a rider to your policy.
Many companies, when writing New Jersey business interruption coverage, will add on an Extra Expense coverage, which mitigates the loss when extra expenses are incurred to minimize the suspension of operations.
In many cases BI insurance can be extended to cover additional losses:
- Off Premises Utility Services
- Dependent Properties
- Electronic Vandalism
- Extended Business Income, and
- Food Spoilage
Speak to an agent about your New Jersey business interruption coverage needs.