Bruce Sackrison

Bruce Sackrison is a Napa Valley Register columnist who will write about property and casualty insurance matters.

Business interruption insurance is like the “lost and found” of business insurance. I’ll explain why.

The sad story of Bill and Gary’s Famous Bookstore.

Bill and Gary had a local bookstore that did exceptionally well. Major bookstores had closed right and left. But their customers were loyal and bought enough books to provide for Bill and Gary and five full-time employees, as well as 10 part-time employees.

The bookstore had a lost-and-found. Bill and Gary joked that people were always leaving things behind.

One day, a major fire started in the adjoining building. Smoke and water and fire damage made their store unusable for months. It was devastating.

That’s when Bill and Gary discovered they needed their own lost and found.

Their bookstore lost income immediately. They couldn’t sell smoke-damaged books in a ruined building.

Bill and Gary also lost a place to sell the replacement books that were being shipped to them. Books were no good in boxes. They needed to be on shelves. They needed a temporary location.

Finally, and more painfully, with the lost sales, they had to let their trained employees go. These employees were almost like family.

To hire new employees months later, train them, and create the same environment that made their store so special... well... it seemed impossible.

Bill and Gary’s Famous Bookstore needed cash flow. Without it, they went out of business.

They needed business interruption insurance. They didn’t have it.

What is business interruption insurance?

Think of business interruption insurance as a paycheck for your business when it can’t operate because of a covered loss.

In other words, it’s disability insurance for your business.

Your basic business insurance policy covers two major things: liability and property. But without business interruption insurance, there is no cash flow to keep the doors open.

Here are just a few ways that business interruption insurance can be the “found” to your “lost.”

1. Lost profits.

When you are shut down due to a covered loss, you aren’t making money. Business interruption insurance can keep the profits coming into the till.

2. Cost to relocate.

You may need a new place (like Bill and Gary) to temporarily operate your business. Business interruption insurance can pay the movers to get that done.

3. Rent.

After you move, you’ll need to make new rent payments. Business interruption insurance can write that check until you are back in your normal location.

4. Loan payments.

Your business may be disabled, but your creditors still expect payment.

5. Payroll.

This could be the most important benefit. You have trained and loyal employees. They can’t be expected to wait weeks or months for your business to reopen. Business interruption insurance can make payroll while you get up and running again.

My advice:

Often, business interruption insurance is automatically included in your commercial insurance policy. But not always.

It’s also possible that even with it included, it’s not enough. Most business owners don’t know how much coverage they have.

I recommend getting an annual business insurance checkup with your local agent. And if you don’t have a local insurance agent, call or email me. I’d be happy to answer any questions you may have.

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Bruce Sackrison is an insurance property and casualty broker affiliated with Professional Insurance Associates. He is at 707-931-0186 or bruces@sackifs.com.