a fire or other disaster puts you out of business, replacing your
facilities and/or inventory is only the beginning of your struggle.
your limits and policy terms are satisfactory, adjusters generally
are eager to hand over money, usually even willing to write you
a large advance check to get started. The job of actually getting
back in business, however, is entirely yours. Meanwhile, you
have no income. Studies show that a sizable majority of established
businesses which suffer a prolonged shutdown due to a casualty event
never reopen, even when they recover fully their lost facilities
and inventory. Why? Customers simply will not tolerate
even brief interruptions in the delivery of your product or service,
certainly not in the "on demand" age.
Interruption coverage is available in many varieties. Subject
to policy terms, limits and coinsurance, you can generally expect
to receive an amount calculated by utilizing historical income and
expense figures projected into future months, less non-continuing
expenses. A common enhancement, known as "Extra Expense"
insurance pays your immediate costs to avoid shutdown & continue
business using temporary facilities, equipment, etc. Those
who are able to take advantage of it greatly enhance their prospects
for survival. Safeco Insurance has an online
form & information that may be useful for calculating needs.
you rely heavily on a single large supplier or a single large customer
you can actually purchase insurance on those operations to make
up your lost revenue if their facilities burn.
you have no plan for immediately reopening with other facilities,
or your type of operation simply would not lend itself to such alternatives,
business interruption insurance will replace lost revenue, but also
may only prolong your agony. Lengthy waits for inventory replacement,
along with a staggering load of regulatory hurdles can easily extend
the rebuilding of facilities into months or years. Few mature businesses
could expect to shut down for long and retain enough customer base
to remain viable. This is emphatically NOT an argument against carrying
insurance, but an important reminder that you need to prepare a
fundamental plan for resuming business quickly.