Does my policy cover business losses?

If you have a business that was damaged or lost, or your business works with a business that suffered a loss, your insurance policy may provide numerous ways to compensate you.

Business interruption.  Many business policies cover the profits or income a policyholder will lose while their business is under repair and reconstruction.  Most policies limit the total amount of benefits payable to one to two years, and the benefits are only payable on a month-to-month basis, and only until the business is back up and running.  Because lost profits may be difficult to calculate, this is often a significant area of dispute, particularly for less established businesses, or those without pre-established income streams (such as set lease payments).

Extended business interruption.  Some policies also cover lost profits even after the business is rebuilt and back up and running.  This coverage will compensate the business for the difference between its pre-loss profits and its current income, until the time period for coverage expires or the business returns to its pre-loss profitability.

Contingent business interruption.  If your business is unable to obtain components or services it needs to operate because another business suffered a loss, you may be able to recover for that under your insurance policy.  This coverage does not depend on any kind of physical damage to your business property, but it protects your business in the event another business you depend on suffers a loss.  For example, there are wineries in the Nor-Cal fires that did not suffer any actual damage, but they are unable to obtain the grapes they need because their suppliers suffered major losses.  Those wineries may be able to get compensation for that loss under this kind of coverage.

Business replacement property.  Nearly every business insurance policy will pay the cost to repair or rebuild damaged or destroyed property.  But what many policyholders do not know is that they will also pay to purchase new property instead of repairing or rebuilding.

Debris removal.  Every property loss results in debris.  Many policies contain separate coverage amounts to remove debris, which are separate from the coverage limits to rebuild.

Computer/data breach.  Traditional insurance policies only cover damage to physical, tangible property, not data loss.  However, many business policies provide extra coverages for lost data.

Special equipment coverages.  Most standard property policies are designed only to cover structures (or business vehicles).  For large and expensive machinery used in a business, insureds usually have to buy separate policies.  These specialized policies are often customized to provide as much protection to the business owner as possible.

Law and ordinance insurance.  If your business property is damaged or destroyed, standard insurance covers the cost to build back what you had before the loss.  But what if the local laws have changed and as a result you now need to rebuild differently?  These extra expenses are covered under a separate provision called law and ordinance insurance.  These are separate limits and vary widely from policy to policy.  Some policies have limits as low as $10,000, others in the millions.

Excess casualty.  Many times, businesses cannot buy policies with high enough insurance limits to cover their potential losses.  As a result, many businesses purchase excess insurance.  These policies can cover the same kinds of losses the other policies cover, but they only kick in once the limit of insurance in the other policies are exhausted.