Business Interruption

Trivia Time

In the previous post, we asked the question:

According to recent statistics, approximately how many identity theft complaints per month do Canada?€?s largest credit bureaus receive?

Answer: Statistical information from Equifax and Trans Union reveal that they receive over 1,800 identity theft complaints from Canadian citizens each month!

Did you guess the answer?

Now for this post?€?s question!

What is the difference between Business Interruption and Extra Expense coverage?

We?€?ll reveal the answer in our next post!

Bill is the owner of a taco stand,  Terrific Tacos. He knows what it takes to make the best taco, and he can?€?t wait for the day when he sells more tacos than anyone else in town! And even though he can only pay a livable salary, the employees love working for Bill. It?€?s like a little family, and he?€?s seen people start to choose his taco shop over the big, flashy burrito stand down the street.

But last night, Bill?€?s taco shop flooded after a terrible storm. All the equipment needs serious repair, and some machines may be permanently damaged. Because the power shut off, all the food in storage has spoiled, and the rest of his inventory is a complete write-off. Estimates say it?€?s going to take up to two months before he can re-open again. He feels like he?€?s drowning in stress, trying to figure everything out and it looks like he may even go out of business!

Bill?€?s employees need money to pay their bills, and he?€?s heard whisperings that the burrito stand is hiring?€?and his employees are being given first consideration in interviews. His customers need somewhere else to eat at, and the burritos are mighty tasty. He?€?s worried how he?€?s going to pay for everything, and he?€?s concerned about being able to lure customers back after the gap in service.

But if Bill had business interruption insurance? He?€?d still be closed for a few months, sure… but those worries, and his employees, would be taken care of, and he?€?d be back on his feet in no time, instead of possibly being forced to close down for good.

Could this happen to you?

 For entrepreneurs, your business is your passion. It is your big idea, the income on which your family and your employees?€? families rely to pay the bills, fix the car, send the kids away to college, and everything in between.  It is your life?€?s work and it can be wiped out by a random event! That?€?s a terrifying thought, especially if it?€?s not adequately insured.

That is why you sit down every year and review your insurance coverage.  You make sure that the limit you have for your building, contents, and equipment are adequate.  You double check your vehicle list and your driver list to make sure nothing has been forgotten. 

Could you go without income for weeks?

Despite all this good work, many businesses still fail following an insured loss for the simple reason that they have not considered the impact of an interruption in their revenue if a loss puts them temporarily out of production.  Very few of us have deep enough pockets to go without income for weeks or months. 

Your broker is likely recommending you consider some Business Interruption coverage.  I know it seems like one more thing to buy, one more expense, but its purpose is to replace lost income, cover additional expenses incurred, and cover payroll for your key employees.  

Would your customers defect to the competition?

Would your customers be in a position to wait for you to be back up and running, or would they go elsewhere?  Once gone, it can be difficult to lure them back. It may well be worthwhile to spend some cash in holding to keep going. Could you rent other space or equipment and keep your business up and running?  Adding on Extra Expense Coverage will fund those extra costs you incur so that you can continue to serve and retain your customers. 

Good people are hard to find!

What would happen to your employees if you don?€?t have revenue to cover their payroll? Would they leave? Would they take other jobs? Could they go and work for your competition? 

Your Staebler broker is your insurance professional. We have the knowledge to help you protect what matters to you most, so call your Staebler broker.  Why take a risk that great if you don?€?t need to?