BUSINESS INTERRUPTION AND BUSINESS EXPENSE INSURANCE
While Business Property Insurance covers the cost of lost property, in many instances the loss caused by the interruption of business can exceed the amount of physical damage. Business Interruption generally consists of two parts: Business Income and Extra Expense.
Business Income will pay the insured for lost earnings during a total or partial suspension of business caused by direct physical damage to the insured’s premises. The policy covers “actual loss sustained” by the insured because of the interruption of business during the period that it would take to rebuild or repair the damaged property. Extra Expense reimburses the insured for the extra costs that are necessary to continue business operations during the period of restoration.
Most small design firms can be insured inexpensively for their actual loss sustained up to 12 months with no limit on the amount of insurance. Larger firms may be subject to coinsurance clauses under which the insured agrees to carry a minimum amount of insurance unless an “Agreed Amount Endorsement” is added to the policy. Often misunderstood and neglected, this coverage should be carefully reviewed with your insurance advisor.
PDI is an Indianapolis-based wholesale brokerage firm with a national network that includes thousands of insurance agents, brokers, architects, engineers and contractors in all 50 states. Since PDI’s beginning in 1980, we’ve handled a single line of coverage: errors & omissions (E&O) for design professionals.