You just had a major fire at your business and now your doors are closed indefinitely. While your property policy will cover the costs to repair or replace your building, equipment and materials, you worry that your business won’t survive for very long as you still have expenses to pay but no steady income.
You can stop worrying if you have Business Interruption Coverage, which will cover your lost income and your daily operating expenses until your business is once again back up and running.
Actual Loss Sustained vs. Profits
There are two common forms of business interruption coverage.
Actual Loss Sustained
The first is Actual Loss Sustained, which is also known as Earnings, which covers a business from the time of the loss until it once again reopens. This form can be challenging to some businesses however as their earnings may continue to suffer after they reopen, and in some cases, their earnings may not be sufficient to cover their monthly expenses.
This coverage is based on a business’ ability to regain the same income level it had prior to a loss. The coverage period is usually limited to a maximum of 12 months, but longer periods are available.
Your property policy may automatically include a form of business interruption coverage as part of a package. With some policies, it can be purchased as an option.