How to Cover Losses with Business Interruption Insurance

Nov 5
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The recent tornados in Dallas brought operations to a halt to a few local restaurants. There are several different types of business insurance that can all help cover your restaurant or business in one-way or another. Property insurance is a type of insurance that can cover physical damages and losses to your business. But when property damage and losses happen to your business, restaurant owners are always curious what happens to the losses that add up because of the inability of the restaurant or business to operate as usual. To help cover these losses, you will need business interruption insurance.

What Does Business Interruption Insurance Cover?
If your business is to suffer from a damaging or catastrophic event, such as a fire or a tornado, you will need to find a way to cover your revenue you will lose while repairing. Another issue with any business interruption is that your restaurant or business will still be obligated to pay its bills and any other additional expenses, even when not operating. Business interruption coverage can get many, if not all, of these costs and losses reimbursed for your business. The main things that business interruption coverage covers is revenue lost due to closure, fixed expenses like rent and utilities, and expenses of operating from a temporary location. There is also a possibility that your business interruption policy will also cover additional expenses that have to do with the disruption of your restaurant or business.

How to Determine Your Business Losses
For your business or restaurant to be eligible for business interruption insurance, there needs to be proof of direct physical damage to the property from an insured event. You will also need to make sure to clearly establish what your business could have earned if the loss had not occurred. Your business losses will also be determined by your past tax returns, profit and loss statements, and projected sales and non-continuing expenses. If you keep very accurate records of your business, it will help with the accurate projection of your business interruption losses.

How to Get Business Interruption Coverage
Business Interruption Insurance can either be sold as a stand-alone policy, although not common, or as a part of a few different types of insurance policies. These types of policies usually include commercial property insurance, business owner's’ policy and commercial package policy.

Limitations of Business Interruption Coverage
Even though business interruption coverage or insurance can help your restaurant or business survive a disaster, there are still some limitations. One example of a limitation can be when the interruption is caused by something not on premises like when the transformer blows several blocks away and leaves your restaurant without power. You may or may not be covered. Some of the limitations of business interruption insurance can come from when it is a part of an insurance policy, instead of a stand-alone policy. In commercial property policies or property insurance policies, you may not be covered for everything that you should be. If you are to get business interruption insurance by itself however, you likely won’t have to worry about any limitations. Its imperative that you review your policy with a trusted insurance expert. We often see some owners relying on a family friend or golfing buddy who happens to be a licensed local insurance agent who focuses more on personal lines than commercial accounts. Its best to go with an agent that has experience insuring restaurants.

Business Interruption Insurance for Restaurants
If your business or restaurants suffers from a disaster you will need business interruption insurance to cover any losses that will come along with that. You will also need to cover any possible incomes losses while you are out of business. For the best possible business interruption insurance coverage for your restaurant we recommend you contact your local insurance agent or talk to an agent at Marsh Wortham. Marsh Wortham offers a plethora of other insurance services for your restaurant’s every need. To learn more about the Texas Restaurant Association insurance programs contact Alec Knight at 610-283-7067.


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