Business Income And Extra Expenses Insurance — What You Should Know

Interruptions in business operations due to things like natural disasters, fires, or break-ins can cripple a small business. One of the best ways to protect yourself against this financial risk is to carry two important pieces of business insurance: extra expenses insurance and business income insurance. What are these and how do they work together to maximize protection? Here's what you need to know. 

What Is Business Income Insurance?

Business income, or business interruption, insurance helps pay for lost revenue after a covered incident. If your store suffers a fire and must close temporarily in order to clean up and renovate, this insurance would kick in to help fill in the gap. It would calculate your normal revenue and expenses versus any current revenue and expenses, then cover the differences. 

What Is Extra Expenses Insurance?

Extra expenses coverage is designed to help defray additional costs incurred in order to keep your business running after an incident. Lost your roof in a hurricane? If you can continue business temporarily in a rented office, extra expenses coverage would pay for the costs over and above normal business operations. It can also help pay for measures that get you back to normal operations sooner. 

How Do These Policies Work Together? 

Business income and extra expenses insurance clearly have different means of helping you attain the same goal: staying in operation until you can get a covered problem resolved. This shared goal is why they work best together, as many situations cannot be covered solely by one policy without the other. 

For example, if your retail store is damaged by a local wildfire, one insurance policy might cover your lost income while the other pays for a temporary location to mitigate losses. Once you move back in, though, surrounding damage may still inhibit customers from returning at pre-fire levels. Your business interruption policy might kick in to provide a lesser amount for an extended period. Or extra expenses coverage might allow you to rent space from an unaffected business to get your customer levels back up sooner. 

Where Can You Learn More?

Clearly, most businesses could use the added protection of both extra expenses coverage and business income insurance. Learn more about how they work and what you need to take advantage of them to their fullest by meeting with a commercial insurance agent in your state. The sooner you make these part of your portfolio, the sooner you can have the peace of mind from proper protection.