Physical Restoration vs. Fiscal Restoration

Physical Restoration vs. Fiscal Restoration

Business owners buy insurance because they know they need to protect what they have created as well as the livelihoods of their families, their employee's and, their employees' families. No one really wants to sit down and imagine that all going away, but the reality is that it is possible to lose it all - and many have.  Insuring what you have built is not a matter of a simple yes or no decision –“Yes, I want my business insured” or “No, thanks, I’ll take my chances”.  The decisions involved in making responsible insurance choices are complicated, and understandably confusing.  Often, Business Income Insurance is one of the most insurance coverage's that gets overlooked.

It is a common misconception, or oversight, by business owners that by insuring their building and property they will be fully restored in the event of a loss. Yes, if you are properly insured you can physically regain what was lost but what about fiscal restoration? There is so much more to consider than just the physical. How will you pay your bills while you are rebuilding? What about your employees; how will you retain your essential workforce without payroll? Not to mention a whole host of other expenses incurred due to the loss having occurred like storage units, rentals, etc.  The ultimate goal in purchasing adequate limits of Business Income Insurance should be to make you fiscally whole again.  The bullet points below outline what Business Income actually covers:

• Net Profit – what you would have made had the loss not occurred
• Continuing Expenses – Including things like taxes, premium on insurance, payments on owned or leased autos, utilities etc.
• Payroll
• Extra Expense – Expenses that you would not have incurred had you not had the loss (more on this later)

One would be hard pressed to find a business that would not be affected by losing at least one or all of the above mentioned factors. So, this begs the question – How does a business owner establish limits for their business income protection? Because every business is unique there are no hard and fast rules to deciding how much business income to buy. Here are some key elements that will factor in to determining your limits:

• How long will it take for your business to be rebuilt (6 months? 2 years? More?)
• How long will it take to replenish your stock?
• How long to replace your machinery? – This can be especially important to factor in when your business requires the use of specially made or custom machinery
• What are your peak seasons, if any?
• Is the area your business is located subject to any ordinance or laws – Meaning, will you be required by law to upgrade your building to be in compliance with new laws or codes?

It is vital that you discuss Business Income coverage with your agent. They cannot make the decisions on limits for you, but they are there to help guide you through the process to ensure that if you ever experience a serious loss, you will be made whole again in every sense – physically and fiscally.  Call me today at 877-352-2121 to review your current insurance coverage's or to talk about adding Business Income to your policy.