Imagine This: Business is Burning

It’s the middle of the night and you’re woken by a call. The voice on the other line in calm and collected, but tells you something that gives you nothing but a pit in your stomach and covers you in waves of anxiety and stress.

“Hello, we’re sorry to report that your building located on the corner of Bad Luck Street and Oh No Avenue has caught fire.”

You hang up the phone and get yourself pulled together to rush down to your small business, or what’s left of it, and find that the voice on the other line was not pulling some awful school kid prank on you. 

What now?

Well, aside from waiting for firefighters to put out the flames, you’ll need to get things going on the insurance end, in order to keep your head above water…or should we say, flames? Sorry, too soon!

Most likely you’ll want to maintain your employees and even keep paying them. You were proactive and covered yourself with what is known as business income coverage. The intention of this coverage is to replace your lost income from the damage your property experienced. This part of your policy only applies to the loss of income from the damages, not from something like a worldwide pandemic.

How are you going to prove the loss of this income though? Here’s the trick, you have to provide accounting records for the past twelve months to show the revenue and cost to your insurance company. From there, they will hire an investigative accountant and that individual will come up with an average amount of monthly income lost. This is the number that the insurance company will pay you. 

There is, however, a limit to the coverage that you selected and your loss must be proved for it to be paid out. An actual loss sustained is one type of payment, or you could select a lower limit to float you. We recommend that most customers select ALS – this has a twelve month limit and a thirty day waiting period in most cases though. So don’t expect a payout the following day. This is one of the most important coverages in all of business insurance policies, and unfortunately seems to be the most overlooked.

At the end of the day, before you get this call, you have to ask yourself, “If I have no more income today, how long can I survive?”

Article written by contract writer and digital media coordinator: Candace Cox. You can reach her at socials@howardwebbins.com or candacecox96@gmail.com. 

Candace Cox

Contract Writer &

Digital Media Coordinator