Business Income Insurance or Business Interruption Coverage is not only the most often overlooked insurance coverage, but the error rate in how it’s calculated is over 90%, and I am being generous here. Skeptical, pull your policy. My guess is your current agent or broker just applied your gross sales to arrive at the Business 
Interruption limit, or worse if it’s actual incurred loss it’s only for 12 months. I love actual incurred loss, what it should state is “Actual Incurred Loss As Calculated By The Insurance Company”. Yes, there is a HUGE difference.
Imbedded in most insurance policies are provisions for “business interruption insurance” or “business income” . It’s these provisions that provide coverage for loss of critical business income that provide the financial sustenance for a business to survive. Simply because your business suffers a loss, your bills don’t stop. I know my landlord at Bridge Street in Irvington NY wants his check on the 1st of each month, regardless of any business or personal tragedy. He knows his bills keep coming as well, it’s a vicious cycle. Thus quite often you have insurance to help bridge the financial gap between the revenue that your business would have enjoyed except for a covered event. How the loss is calculated and ultimately reimbursed is an article all by itself, and it differs depending on what type of business you are in, (i.e. manufacturer, restaurant, retail wine merchant, hotel).
If NY Business Interruption Insurance is deemed critical to the survival of your business we suggest performing a Business Income Stress Test. Quite simply what we do is offer up two or three likely claim scenarios that would potentially keep most C.F.O.’s up at night. We overlay your companies current financial’s, ( P&L , Balance Sheet), and apply the insurance carriers formula for calculating the business interruption portion of the loss which is contained in your insurance policy. In each claim scenario, we show you what your potential shortfall is BEFORE the loss occurs which is a critical point. To perform this calculation after the event is called a CLAIM, which at that point is simply P&L triage to get you through the month.
It’s absolutely essential that this stress test be performed on every business. In our business we can pick up and move to a temp facility provided there is power, and be operational in a matter of hours. A NY Wine Merchant, or Westchester NY Restaurant cannot. Understanding your cost structure, what is and is not reimbursable, and planning for it upfront quite often is the difference between life and death for many small businesses because they don’t have the financial cushion or the credit lines to make up the difference. The insurance proceeds from business interruption, or business income claim is the only financial lifeline.
If you are interested in seeing how your business would fare in our proprietary Business Income Stress Test, please speak with one of our Risk Advisors or call 914-357-8444.
Photo by Ilya Pavlov on Unsplash 
