Business Income Interruption (BII) provides coverage for the intangible economic losses that occur following a direct damage loss to tangible property. These are future- looking forms and coverage is based on the loss of anticipated economic benefits. It is important to consider the financial impact as well as probable length of disrupted operations resulting from a property claim when determining an appropriate limit. Dependent Business Income is an additional feature that can be added and factors in the possible impact of a property loss to a key supplier or customer.
Extra Expense coverage can be provided to pay for all monies that must be expended to get an insured back in business in the fastest way possible without regard to income to be generated by the return to business. These would include, but not be limited to, transportation fees when using next- day service rather than normal shipping schedules, any surcharge to put a rush on a purchase order, special set- up fees that may be charged for a manufacturing order, etc.
For Example: A manufacturer suffered a fire loss to key machinery in its manufacturing process. Although operations were interrupted for less than three weeks, the company suffered more than $1.5 million in lost earnings and extra expenses.
Fortunately, this particular company had purchased adequate business interruption insurance before the potentially devastating event occurred.
Many companies are not as fortunate as this one. Because when it comes to property insurance, the real and personal property are often the principal concerns. In fact, the key to surviving a disaster may very well depend on the firm’s loss of income protection.