Florida law requires business owners to purchase certain types of insurance, but there are other coverage options as well. (Also keep in mind that the city or county in which your business is located might also have commercial insurance requirements.) The following includes several examples of commercial coverage options:
Property Insurance
There are different types of property insurance that business owners can buy to protect their physical assets. The first step is to evaluate (the kinds of damage your business is susceptible to. Fire and smoke damage is also a possibility. And being in Florida, wind and hurricane damage is something to consider.
Business Interruption Insurance
Business interruption insurance covers basic expenses like rent, utilities and sometimes payroll if you are forced to close operations because of an insured property loss (like after a fire or hurricane). You can also purchase specialized options that cover expenses that will help you get your business running again more quickly.
While Florida law doesn’t require business owners to obtain business interruption insurance, it is often a sound business investment, especially in a state regularly threatened by hurricanes and other weather disasters. Last fall, numerous businesses were forced to close during Hurricane Matthew, including Walt Disney World. One hundred mile-per-hour winds forced Disney to close its four main theme parks (Magic Kingdom, Epcot, Hollywood Studios and Animal Kingdom) as well as its water parks.
Closing your business, even for a day, can be very expensive. Even when your business isn’t operating you still have to pay rent, utilities, payroll and other expenses. In fact, according to the Insurance Institute for Business & Home Safety, one-quarter of businesses that close because of a disaster don’t reopen. That’s why all business owners should consider purchasing business interruption insurance, which covers basic operating costs and, depending on your policy, other special expenses, when you are forced to close because of an insured property loss (like a hurricane).
What Else Does Business Interruption Insurance Coverage Cover?
What your insurance covers depends on the terms of your particular policy, but common options include:
- Lost earnings. For example, if you are in the retail business and had been preparing to ship merchandise that was destroyed before you could send it, your policy might recoup some of those losses.
- Relocation Expenses. If you have to temporarily relocate your business, your policy might cover the difference in your utility bills.
- Special Expenses. It takes a lot to get a business up and running again. Sometimes you need new equipment, which might take a while to arrive. Some policies will cover expedited shipping costs to get you what you need to resume operations.
What Do You Need to Know Before Purchasing Business Interruption Coverage?
There are a lot of things to think about before obtaining business interruption insurance. But the first step is to consider how long it will take to resume operations after a loss. That will help you decide how much coverage you actually need. Go through different worst-case scenarios, including hurricane damage and fire damage, to determine what your specific losses would be and what you need to get things back up and running.
Here are a few other things to consider:
- How likely is it that a particular disaster (like a fire or hurricane) will strike?
- Do you have a functioning sprinkler system?
- Do you have a disaster preparedness plan (i.e., do you have a plan in place to prevent loss during a hurricane or to minimize loss during a fire)?
- If you rent a commercial space, how well protected is your building? What kind of disaster preparedness plans does it have in place?
- How easy would it be for you to find a temporary business location if you have to close?
Theft Insurance
Theft insurance protects businesses from losses caused by employee fraud and other crimes, as well as robberies, burglaries and other types of commercial crime. You can also purchase a separate policy that specifically covers employee fraud and theft. That is often referred to as fidelity insurance.
Commercial property insurance coverage is different from residential insurance coverage in a number of ways. For example, the size of the claimed loss is typically much greater in a commercial setting than in a residential setting. Businesses also have to worry about paying employees in addition to paying bills. And of course if they don’t sustain a profit they ultimately won’t stay afloat. So it’s important that the insurance claims process is handled efficiently and effectively.
Reach Out to Us for Help Today with your Commercial Property Claims
The Insurance Litigation Group can help business owners in Florida pursue claims for business interruption and other damages under their commercial property insurance coverage. Our experienced attorneys and former public adjusters at ILG understand the unique factors involved in evaluating the measure of damages to a business and can also help walk you through the insurance claims process in the event of a loss. For a rapid response and dedicated service from qualified, experienced and successful insurance law attorneys Reach out to us today for a free consultation.
Resources:
disastersafety.org/wp-content/uploads/open-for-business-english.pdf
money.cnn.com/2016/10/07/news/disney-world-closed-hurricane-matthew/
