ORLANDO, Fla. —As a restaurant owner, you may be wondering exactly how much business insurance do you need if a hurricanes strikes your area and you are obligated to close and lose all sources of income. Things like taxes, rent, loan payments, wages, utilities, and more can all continue to accrue during a closure, so once you have added all of the figures up, determine how long a major event would cause your business to shut down and factor out the costs over that length of time.
You need to make sure your commercial insurance coverage includes business interruption. If your business is unable to operate and generate revenue due to an event that is covered by the business interruption policy, the insurance benefits can help you meet your financial needs for things like rent, orders, and payroll. If a major hurricane comes through the region, but your restaurant is spared but the following your main food vendor call you to let you know that they can’t deliver due to the storm, your restaurant may lose some business because you wouldn’t have enough food to supply your customers demand. This type of supply chain coverage is called contingent business interruption coverage.
While homeowners’ insurers are required to include windstorm coverage for residential properties in Florida, commercial property insurers are not required to provide it for non-residential properties. With that said, at the time of purchasing your business coverage, it is important to reassure that your insurer does include wind or windstorm as a covered cause of loss.
When hurricane Irma pummeled Florida last year, leaving millions of businesses without electricity for days, and for some, for more than a week, commercial property insurance helped these businesses recover damages from the loss of power, but many factors come into play. Your business’ coverage will vary depending on a variety of factors, including the insurer who issued it and your policy.
Many commercial property insurance policies include an “off-premises” exclusion that purports to exclude direct or indirect damage that a company suffers as a result of a power failure that occurred away from the insured premises. The applicability of the off-premises exclusion depends on the specific facts of the loss and the specific policy language and courts of different states have taken different positions on whether particular “off-premises” exclusions are enforceable or impermissibly vague, which remains an open question in Florida.
Business interruption coverage (and contingent business interruption coverage) is generally only available for the length of time often referred to as the “period of restoration.” The period of restoration generally begins on the date the physical damage occurred that caused the suspension of operations and terminates on the date by which the insured should reasonably have repaired, rebuilt, or replaced damaged property.
As an example, after Hurricane Harvey, many policyholders claimed coverage for business interruption losses, although many did not experience property damage themselves but suffered losses due to civil authority orders, lack of access to their property, or the inability to receive goods or services from suppliers located in regions hit by the hurricane.
The validity of these claims depend on the particular circumstances of the claimed interruption and the language of the insurance policy.
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