If you’re wondering if Albany NY business insurance covers lost income, you have come to the right page! The simple answer is that an Albany NY business insurance policy can provide coverage for your lost income. However, the loss of income must be due to an insurable loss.
The coverage is commonly referred to as business income or business interruption coverage. A typical business income coverage clause reads, “We will pay for the actual loss of business income you sustain due to the necessary suspension of your “operations” during the period of “restoration.” The suspension must be caused by the direct physical loss, damage, or destruction to property. The loss or damage must be caused by or result from a covered cause of loss.”
Highlighted above are three terms that you need to know in order to understand the coverage (definitions provided by Marsh:
- Actual loss sustained: Business income coverage covers the actual loss sustained by the insured as a result of direct physical loss or damage to the insured’s property. It must be caused by a peril not otherwise excluded from the policy.
The insurer is only obligated to pay if the insured actually sustained an interruption of business leading to a business income loss. The extent of the insurer’s obligation is limited to the dollar amount of loss actually sustained. It cannot exceed the applicable policy limit.
- Business income: Usually, the carrier is liable for the reduction in net income that results from suspension of operations—whether wholly or partially—due to a physical loss at the insured’s premises. This following commonly used definition of business income is intended to clarify what sums can be included when calculating the amount of loss.
“Business income includes the net income (net profit or loss before income taxes) that would have been earned or incurred by the insured and the continuing normal operating expenses incurred, including payroll.”
- Period of restoration: Insurers are liable for the loss of business income only during the period of restoration. It is the length of time required to rebuild, repair, or replace the damaged or destroyed property. The period of restoration begins when the physical loss or damage occurs. It ends when the property should, with reasonable speed, be repaired or replaced.
Business income coverage may not be necessary for every business owner looking for Albany NY business insurance.
For a company that does not have a physical address that is crucial to its business, such as a contractor, business income may not be necessary. For store front or main street businesses, like a coffee shop, business income is a must. Click here to watch a short video on “Should my small business have business insurance income?”
If you would like to discuss this coverage further, please give us a call at (518) 456-6688. You can also email me at email@example.com.
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