Arkansas HVACR NewsMagazine September 2018

S tate, National, Chapter News State national Chapter News

Business Interruption Coverage

penalties. Many businesses that suffer major damage to their facilities never recover. If BI limits are not adequate, the odds of recovery are even more remote. The first thing you need to figure out is exactly what you would do if your place of business were damaged or destroyed . Would you retire? If so, you might not want to buy BI coverage. However if you want to stay in business, then you need to decide how long it would take you to get up and running again. Would you suspend operations until you could reoccupy your current location? Would you search for an alternative permanent location? Could you use other premises to partially resume operations until your new permanent location is available? All of these questions need to be answered while deciding on your BI coverage amount and plan. The Second thing you would need to consider is Payroll . You have the option of including or excluding what is called “Ordinary Payroll.” Ordinary payroll is defined as “payroll expense of employees other than executives, department managers, contract employees etc.” If your “ordinary” employees are important to your operation, you may want to keep them on your payroll until you are ready to reopen. Additionally you can specify how long you might want to include them, for example (30, 60, 90 or 180 days). Once you have determined your monthly exposure and how long it would take to get back in business, you multiply your monthly exposure by the number of months it will take to get back in business. These estimations produce your Business Income Valuation for the period of restoration.

Heath Shearon CPIA, iTrust Insurance Group

Insurance, when I talk to my clients it’s fairly easy for them to tell me how much insurance they need to cover their assets; property, payroll, a list of autos, or estimation of sales figures for the upcoming year and so on and so forth. However, there are coverages that are not so cut and dry. Today I want to talk to you about Business Interruption Coverage. Business Interruption covers the loss of income that a business suffers after a major loss or disaster. Let’s imagine you have worked really hard and saved all of your money to open your own HVACR business. In this case you purchased a BOP (Business Owners Policy), which has all the bells and whistles that make you feel good at night including Business Interruption. Well, that BOP only has a specific amount of Business Interruption and is often not enough to cover the loss should you have a claim. Make sure you and your insurance agent calculate correctly and set the policy limits so that they are sufficient to cover your company for more than just a few days or weeks. Business Interruption coverage can be confusing. It is commonly mis- understood because of the difficulty with setting appropriate coverage limits. It also creates the biggest opportunity for inadequate values and coinsurance