When a fire or other disaster puts you out of business, replacing your facilities and/or inventory is only the beginning of your struggle.

Assuming 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.

Business 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.

If 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.

If 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.


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