After a disaster like Hurricane Michael, most business owners know the importance of promptly notifying their insurance companies to report physical damage to their storefronts, offices, warehouse, hotels, gas stations, restaurants, rental properties, or other business property. At this time, business owners usually make a claim for damaged or destroyed business personal property as well. Depending on your policy, this includes losses to inventory, computer equipment, office furniture and furnishings, medical equipment, merchandise, supplies, etc.
However, many business owners do not realize they should (if they purchased this coverage) also make a claim for business interruption and/or lost business income. Each policy is different as to the exact coverage afforded but a typical business policy may provide coverage for the following:
- Continuing Normal Operating Expenses: These are expenses that continue even at the temporary location such as electricity, water bills, and payroll.
- Loss of Business Income: This provides coverage for net lost income sustained due to the necessary suspension of your business due to direct physical loss or damage. Note that under most policies, this coverage does not start for 72 hours after the loss. So if your business was forced to shut down for only two days, you will most likely be unable to file a claim for lost business income (of course, you can still file a claim for any property damage).
- Extra Expense: This includes coverage for extra expenses incurred during the “period of restoration” that are above and beyond normal operating costs. Such costs could include advertising the new location or moving expenses to temporarily relocate.
If your policy includes coverage for business interruption and extra expenses, it is extremely important to carefully document your claim. As soon as possible after the storm (or other loss), take all reasonable measures to protect any undamaged property. Take photographs and create inventories of the destroyed and damaged premises and business property. Keep all invoices, records, and receipts for any temporary repairs as well as all incurred extra expenses and costs. In order to support a lost business income claim, you will need to provide your insurance company with financial records such as payroll ledgers, sales records, and/or tax returns. Your CPA can help you document your claim.
Business interruption claims can be complex and may feel overwhelming. Whether you are getting ready to make a business interruption, lost business income and extra expense claim, or have already reported your claim, contacting Murray + Murray could help you avoid forfeiting insurance coverage rightfully yours, or accepting less than what you are owed under your Policy. Contact us online or by calling 813-940-1500 for a free case review.