Business Income and Extra Expense Insurance

Providing Business Liability Insurance in Austin, Round Rock and All of Central Texas

Business income is a type of property coverage.  It is most often found as additional coverage in a Business Owners Package Policy (BOP).

The concept behind business income insurance is that your business receives the money it would have received (usually net profit and payroll expenses) were it able to stay open.  Business income insurance pays out net income (profit) and the ongoing operation of the business.  This usually includes payroll as an operating expense.

There is some debate now about the applicability of business income insurance:

Read More on Business Income Insurance Claims Here

Business income insurance pays out in 2 scenarios

Generally speaking, business income pays out in the event there is a direct physical loss to the insured location in the declarations page of the policy.  This usually has to be a loss by a covered cause of loss.  This means that you have to have a loss at your insured location (a fire, for example) and fire is a cause of loss that would be covered by the policy.

Business income insurance may also apply when a civil authority issues an order limiting access to your property because of a condition present at another location.

Is there a deductible to business income insurance?

Business income insurance may have a deductible in the form of a specific dollar amount, or it may pay out after a waiting period.  The waiting period most often seen in policies is 72 hours from the time of loss.  Those three days of expenses are your “deductible”.  Business income insurance continues until the business has been restored.  Back to our fire example, the business would receive business income only after 72 hours, and only until the building has be repaired from the fire to the point business activities can resume at the location.

Why would a business need business income and extra expense insurance?

This coverage keeps you open and your employees paid during the restoration period after a loss.  This restoration period could be lengthy (imagine the time necessary to rebuild after a fire) especially if your business can only be run at a particular location.

Business income vs. Extra Expense

These are two separate coverages.  Often they come together in a package policy, but they can be purchased separately.  While business income covers the normal operating cost of running the business and the net profit from the business, extra expense pay the additional costs incurred by a business after a loss.  These are the costs that are in addition to normal operating costs while the insured property is being repaired.

Maryam Ati
Maryam Ati
20:44 12 Jul 21
Tami Goode
Tami Goode
21:48 18 Feb 20
Rhett and Debbie are efficient, friendly, and informative! They have excellent customer service and a very quick turnaround.
Cindy Brummer
Cindy Brummer
23:36 17 Feb 20
Rhett, Debbie, and the team at Sunstone are my go-to. They make sure I have the right amount of coverage for my company and that I'm not overpaying. When I need documents or have questions, they are quick to respond and help me. For example, when I needed to increase cyber coverage last year, they did the research quickly, let me know my options, made a recommendation, and we were able to increase coverage. Even better bonus -- the increase wasn't as much as I had expected. Woo-hoo!
William Hines
William Hines
18:27 21 Sep 15
I highly recommend Rhett Braniff for you insurance and risk management needs.I have known Rhett for a long time, so I trusted him with my insurance. Insurance for my business is important to me, and I wanted to make sure I was properly covered. When my policies were coming up for renewal, I asked Rhett to review them. After looking them over, Rhett was able to identify some key areas of my coverage that needed attention. He presented me with several options that allowed me to get great coverage that fit our budget. I secure with my insurance, and I didn’t have to spend a lot to do it.Most of all, Rhett made it easy. He broke down the various coverage areas in easy to understand language, and was able to answer all of my questions. Rhett was sensitive to my time constraints, and didn’t unnecessarily burden me with the process.I recommend Rhett for all your personal or commercial insurance needs.

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