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TheStreet Open House

Has Your Business Been Affected By Hurricane Sandy? Understanding Your Insurance Can Help You Get Your Business Back In The Black

Start the Claims Filing Process as Soon as Possible, Says the I.I.I.

NEW YORK, Nov. 3, 2012 /PRNewswire-USNewswire/ -- As business owners on the East Coast begin the claims filing process, following the devastation of Hurricane Sandy, a reminder from the Insurance Information Institute (I.I.I.) that standard business insurance policies provide coverage for hurricane damage.

Business income (BI) also known as business interruption insurance compensates you for lost income if your company has to vacate the premises due to disaster-related damage that is covered under your property insurance policy. BI covers the profits you would have earned, based on your financial records, had the disaster not occurred. The policy also covers operating expenses, like utilities, that continue even though business activities have come to a temporary halt.

BI typically comes into play if there is physical damage to the structure, though a few companies now offer what is called "non-physical" business interruption insurance which insures for business interruption without a preceding physical loss.

A survey by the National Association of Insurance Commissioners (NAIC) in 2007 found that only 35 percent of small businesses, defined as firms with fewer than 100 employees, have business interruption insurance.

"After a major disaster, it can take more time than many people anticipate getting a business back on track," said Loretta Worters, vice president with the I.I.I. "Depending on the policy, there is generally either a 48-hour or 72-hour waiting period before business interruption coverage kicks in," she noted, adding, "too many business owners fail to think about how they would manage if a hurricane damaged their business premises so that it was temporarily unusable."

If a business does not have physical damage coverage for their property but could not access their location due to an Order of Civil Authority, there could still be coverage for their lost business. However the order must be the result of a peril that is covered under the business owner's policy.  

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