Business interruption insurance is critical to properly protecting your business and its future.
If a catastrophe such as a fire or hurricane causes your business to be temporarily unusable, your business may have to relocate or even close. Business interruption insurance (also known as business income coverage) is designed to help recover the profits you would have earned had you not suffered a loss as well as to help pay for your on-going operating costs such as payroll, loan obligations and utilities while you are out of business. Some policies will also provide coverage for extra expenses you incur during your time of loss.
The professional agents and underwriters here at Morris & Reynolds can assist in arranging the business interruption insurance you need to protect your business. We will help you determine how much coverage you need and shop amongst the world’s leading insurers to obtain the protection you desire at the competitive costs you deserve.
WHAT BUSINESS INTERRUPTION INSURANCE CAN COVER
Lost profits that your business would have earned, based on your historical financial records and other facts, had your property not been damaged by the covered disaster.
On-going operating expenses, such as payroll, electricity, mortgage or lease obligations, that may continue even if your business temporarily can’t function.
Extra expenses beyond what you typically incur such as the cost of renting a temporary location or advertising your relocation while your original premises are being repaired.
Civil Authority Ingress / Egress – Government – mandated closure of business premises that directly causes loss of revenue. Examples include forced business closures because of government-issued curfews or street closures related to a covered event.
There are also a range of important options to consider such as Contingent Business Interruption, Extra Expense, Leader Property, Mobile Equipment, Off Premises Power & Utility Failure and Supply Chain insurance to name a few.
TYPES OF BUSINESS INTERRUPTION INSURANCE
There are many ways in which to write business interruption insurance and within those approaches a variety of options and endorsements to consider. Examples of business interruption policies include;
Business Interruption Insurance
Business Interruption & Extra Expense Insurance
Business Owner’s (BOP) Actual Loss Sustained Policy
Contingent Business Income Coverage
Supply Chain Interruption Insurance
HOW MUCH BUSINESS INCOME & EXTRA EXPENSE INSURANCE DO YOU NEED?
Calculating a correct limit of business interruption and extra expense insurance is critical. Updating and reviewing the limit you carry each year is equally important to ensure your coverage keeps pace with your evolving business and its protection needs. Morris & Reynolds suggests that our client’s and their accounting professionals complete a Business Income Worksheet in order to estimate the amount of coverage you should carry.
An example of a worksheet we suggest using for a Manufacturing and Non-Manufacturing business is as follows:
BUSINESS INTERRUPTION OPTIONS TO CONSIDER
CONTINGENT BUSINESS INCOME INSURANCE
Contingent business interruption (CBI) coverage is designed to cover a business’s income loss resulting from damage or destruction of property owned by others, including: direct “suppliers” of goods or services to the insured and/or direct “receivers” of goods or services manufactured or provided by the insured. The property damage to suppliers or receivers businesses must typically be of a type that would be covered by your own policy had the damage happened at your own business.
CBI coverage typically provides coverage for the “direct” relationship between your “suppliers” or “receivers” of goods or services. For example, if a supplier or customer of one of your direct suppliers experiences a loss resulting in an interruption to its operations, which in turn causes a disruption to your business, causes you a business income loss. Without CBI insurance your policy will likely exclude coverage for this business income loss since your supplier did not experience direct physical damage/loss. This exposure can be addressed by adding a CBI endorsement to your business interruption policy and by listing the suppliers, known as the “indirect” suppliers or “receivers” in the policy.
In recent years Supply Chain Business Interruption Insurance has emerged as an option to traditional Contingent Business Income coverage to help better protect businesses involved in multi-tiered supply chains. To learn more about Supply Chain Insurance please click here.
EXTRA EXPENSE INSURANCE
Extra expense insurance reimburses your business for reasonable expenses beyond normal operating expenses that keep the business from shutting down during a post-disaster restoration period. Usually, extra expenses will be paid if they help decrease business interruption costs. Some companies may find extra expense coverage sufficient without business interruption coverage. Extra expense is typically defined as the necessary expense incurred by the insured during the period of restoration that it would not have been subjected to if there had been no physical loss to real or personal property caused by a covered peril.
OFF PREMISES POWER & UTILITY FAILURE (SERVICE INTERRUPTION)
Service interruption provides coverage to a business for a direct physical loss, damage, or destruction to electrical, steam, gas, water, sewer, telephone, or any other utility or service including transmission lines and related plants, substations, and equipment of suppliers of such services to your business. The loss, damage, or destruction at the location of the utility or service must typically be the result of a peril(s) similar to the peril(s) covered under your policy, as if the damage to the utility took place at your physical location. When arranging this endorsement its helpful to keep in mind that limitations regarding distances (such as where the actual loss occurs to the utility’s property in relation to the insured’s premises where the business income loss occurs), perils (such as earthquake or even windstorm) and damage to overhead transmission and distribution lines maybe limited or excluded.
When you rely on another nearby business for business it’s wise to consider a ‘Leader Property’ endorsement, a type of Contingent Business Interruption insurance. A lead property endorsement can provide business interruption coverage to you for direct physical loss, damage, or destruction of the type covered on your property policy to property not owned or operated by you located within the stated distance to your property or business, and which attracts business to you. Examples would include a nearby amusement park, casino, shopping center, or ‘destination’ type retail store. For instance, smaller stores at a mall should consider Leader Property coverage to cover them for the decrease customer traffic and sales that would take place if the flagship store at the mall, say a Target or Nordstrom’s, is damaged or destroyed.
Some businesses carry business interruption on their own business locations and those they are reliant upon while others might only want coverage in the event the business you rely upon is damaged. Contingent insurance covers the loss that your business might suffer if the operation of a key supplier, customer, or leader property on which your operations are dependent is shut down by an insured peril. Policy form ISO form CP 15 08 06 07 is used to provide this coverage when you carry your own business interruption insurance for a listed location. In an instance when you do not carry coverage on your own premises then policy form CP 15 09 06 07 is an option to consider. CP 15 09 06 07 can be used when you do not carry direct business income coverage at your own premises or when the limits of insurance you desire for the dependent properties differ from the direct business income limit of insurance at you own location.
MOBILE BUSINESS INTERRUPTION INSURANCE
Starting in early 2014, insurers will begin offering business interruption coverage related to mobile and in-transit risks. To provide businesses with flexibility in our ever evolving digital world insurers will make available a series endorsements under its commercial property, commercial auto, commercial inland marine, and business owners programs. Traditional business interruption insurance coverage typically responds when loss or damage occurs at a specific location, when that listed location has been directly damaged. Commercial policyholders have long been able to protect their revenue stream from adverse events that occur at their brick-and-mortar locations, as well as events that occur at the premises of suppliers and other dependent locations. This new coverage option will enable business interruption coverage to respond to the exposures presented by vehicles and mobile equipment while away from the listed location(s) on your policy.
A UNIQUE APPROACH TO BUSINESS INSURANCE
Business insurance is our business. When it comes to your coverage and the risks your enterprise and people face we treat your business as if it were our very own. At Morris & Reynolds we offer a unique, hands on, passionate relationship with our clients that in most cases last decades because of the reliable, results oriented, solutions we provide from year to year. Some of the benefits of our business insurance work for our clients include;
SUPERIOR MARKET KNOWLEDGE, RELATIONSHIPS & INSURER ACCESS
Morris & Reynolds represents and has access to the entire market of leading insurers for all of the risks our business insurance client face. Many of our relationships with major insurers span decades and in some cases date to the founding of our firm in the 1950’s. We also take pride in representing cutting edge and emerging insurers from around the globe to structure the coverage, limits and costs you need and deserve.
ALL FORMS OF INSURANCE, EMPLOYEE BENEFITS & RISK RELATED SERVICES
Our dedicated professional people are your consultants, problem solvers and partners. We help assess your needs, evaluate solutions and suggest alternatives for your organization. We build a high level of familiarity with your company so we can offer the insights that satisfy your changing risk-financing needs. Some of our products and services include:
Alternative Risk Financing, including Captives and Risk-Sharing Pools
Claims Management & Administration
General Property and Casualty Insurance
Group Health Insurance & Employee Benefit’s
Malpractice and Errors & Omissions
Pension & Retirement Plans
Professional Liability including Directors and Officers and Employment Practices
Risk Management & Loss Control Services
Workers Compensation and Employers Liability
AGGRESSIVE, TRANSPARENT, NEGOTIATIONS
Your protection, goals and bottom line are our sole focus. The coverage and costs that we negotiate, in fact all we do, is focused on your protection needs, goals and bottom line. We are known as aggressive negotiators who have our clients’ best interest at heart. Always.
We also enjoy serving our clients in the most transparent manner possible and are happy to discuss and disclose our compensation and answer your questions about that important topic with you. Morris & Reynolds is a truly independent insurance agency and has been since 1950. Our focus is never on stockholders, stock prices or an insurance company preference but our clients’ goals, dreams and desires. Always.
PEACE OF MIND
Insurance is more than a legal contract, it’s your peace of mind. At Morris & Reynolds Insurance we take your protection, and peace of mind, to heart in all we do from the coverage we structure, the insurers we suggest and the day to day service and care we provide to our clients. When you need us most, we will always be there.
VISION & INNOVATION
At Morris & Reynolds Insurance our clients receive the best of both worlds. We are well known for our ‘old fashioned, reliable and responsive service that dates to the founding of our agency in 1950. We are also known for employing cutting edge technology and offering the latest in coverage innovations and ideas to serve our clients’ ever evolving needs. Services such as The Protection Portal, Morris & Reynolds MyWave and the Morris & Reynolds Risk Management & Loss Prevention Services are just a few examples of our forward thinking approach to service.
AWARD WINNING, EDUCATED, PROFESSIONAL PEOPLE
Our Client Service Underwriters, Client Advocates and Professional Agents are deeply committed to their profession and career-long learning. Our award winning TEAM of professional people, the finest people in insurance, is unique to Morris & Reynolds Insurance. In order to offer our client’s the very finest results possible we constantly seek improvement by way of training, performance measurement and process reviews.
Our corporate office is an approved and certified testing site for the prestigious Insurance Institute of America and their curriculum is part of our ongoing TEAM educational efforts. Morris & Reynolds Insurance is proud of the awards that TEAM members have received from a variety of industry associations and insurers, including the Florida Agent of the Year, The National Agent of the Year and The Customer Service Representative of the Year Honors to name a few.
A UNIQUE APPROACH TO RISK REDUCTION
Every day we work to provide you with the very best coverage, care and solutions available. Our extensive range of professional services, designed to manage your risk and make you and your business more efficient, include:
ANNUAL UPDATING & RISK REVIEW
Businesses change and evolve. Because of this, Morris & Reynolds conducts annual audits of your coverage and the exposures, risks and facts that your insurance is based upon. Working many months in advance of your renewal, we ensure that the coverage and exposures are current so that your renewal will progress as your business does.
Coverage such as workers compensation and general liability are based on estimated exposures that are then audited by the insurer after the policy year ends. Our team of experts is available to assist in the preparation of your audit or even conduct the audit with the insurer for you, to save you time and money.
We place an extreme emphasis on your claims. Morris & Reynolds employs licensed, professional insurance adjusters that manage your claims all year long with state of the art automation. Your assigned Claims Manager at Morris & Reynolds is your expert advocate, dedicated to resolving claims quickly and fairly. Whether it is a simple auto claim, a major fire, a devastating hurricane or a complex lawsuit, we will be right next to you doing our best to support you during what we know can be a traumatic time.
ROBUST, ANNUAL, MARKET RESEARCH & AGGRESSIVE NEGOTIATIONS
Morris & Reynolds represents hundreds of the world’s leading insurers, brokers, wholesalers, reinsurers and alternative risk related firms in the industry. As your agent, we aggressively seek solutions from all leading insurers in the marketplace and negotiate one insurer against another to arrange the best possible coverage and cost for you.
RISK MANAGEMENT & LOSS CONTROL
Protecting your business and bottom line through risk management and loss control can have a dramatic impact in lowering your insurance costs and risk related expenses. The risks that you face can come from a variety of sources including project failures, legal liabilities, natural disasters and even deliberate attacks. We proudly offer you best in class risk management and loss control that can help identify, control and manage the risks you face.
STEWARDSHIP & DEEP ANALYSIS
Success in reducing your risk and its associated costs are often found deep in the details of your coverage, claims and business. For this reason, Morris & Reynolds provides a range of detailed stewardship reports and analysis related to your coverage, options, performance, claims and other risk related metrics that are useful in constructing your Protection Plan and managing your risks.
MORRIS & REYNOLDS MYWAVE
Morris & Reynolds’ MyWave is a truly dynamic internet-based portal that delivers robust, time saving tools and information related to employee benefits, human resources and risk management. Simply log on to your customized homepage to find valuable detailed information as well as interactive postings.
|RISK MANAGEMENT SERVICES & SOLUTIONS|
|• Consulting Services
• Claims Administration
• Loss Control
• Self Insurance Plans
|BUSINESS INTERRUPTION PUBLICATIONS|
|New RMS Windstorm Model »
In order to predict their catastrophic losses, property insurers purchase reports from businesses that specialize in predicting the impact of large catastrophes and do so by using highly sophisticated computer programs known as catastrophe models.