Understanding Your Business Insurance Policy

J.P. Gonzalez-Sirgo
Founder of J.P. Gonzalez-Sirgo, P.A.

What is Business Insurance?

If you are a business owner in Florida you have probably either purchased or considered purchasing some form of business insurance. Business insurance is intended to safeguard your business against certain types of losses should your business ever be impacted a covered event. The type of events that will be covered by your business insurance will depend on your specific policy, and the type of coverage you have purchased.

What types of coverage are available?

General Liability Insurance

General liability insurance helps protect your business from claims by third parties against your business. Thus, if your business has caused some type of property damage or personal injury, then this form of insurance would help offset some of the costs of these claims.

Commercial Property Insurance

Most businesses own some sort of physical assets. For many businesses, a significant loss in property can mean serious financial hardship. Whether those assets are real property or items such as inventory or supplies, commercial property insurance protects those business assets if they are lost as the result of a covered event. Covered events may include things such as fires, hurricanes, windstorms, thefts, vandalism, flooding, etc.

Business Interruption Coverage

Your inability to operate your business, even for a brief period of time, can be detrimental to a business and its income stream. Fortunately, business interruption coverage is designed to protect your business’ lost income that can result from the happening of a covered event. Depending on your policy, your business interruption coverage may include both Business Income Coverage and Extra Expenses Coverage

Business Income Coverage

Your business interruption coverage will generally provide at least some protection for loss of business income. Business income coverage protects lost income resulting from a covered event. Of course, if you can still operate your business, even if it means from a remote location, then you will be expected to continue to do so in order to minimize your business’ loss. For example, if it is still feasible for you to continue to sell your goods or provide your services, even if it means at a diminished capacity, then you may be required to do so. A failure to do so may provide your insurer a reason to deny or reduce your claim.

Extra Expenses Coverage

Generally grouped along with a business income provision, will be an extra expenses provision. Extra expense coverage provides support for any added or additional expenditure that may arise when your business is interrupted by a covered event. For example, if you have to spend extra money operating out of a new location, or if you have to shell out money to store your inventory at a new location to protect it, then “extra expense” coverage would reimburse you for those expenditures.   

Business Owner’s Policy

A Business Owner’s Policy is a favorite among small business owners because of its inclusive nature. This type of policy typically provides for some form of general liability coverage, commercial property coverage, and business interruption coverage. If you have business insurance it is important to review the specific language in your policy to determine the extent of your coverage, and your rights and responsibilities under your policy.

What are your rights and responsibilities under your business insurance policy?

If you have business insurance and you have suffered damages to your business property or your business has been interrupted because of a covered event, such as a hurricane, then you may be entitled to reimbursement for the losses incurred. Of course, the exact amount of your recovery will depend on your specific policy. For business interruption claims, your insurer will typically be required to reimburse you for losses incurred during the so-called “restoration period.” The restoration period is the time between the event that caused the loss, and the time it takes your business to return to its pre-interruption status quo.

The actual restoration period, however, will depend on your particular circumstances. Usually, the restoration period will be the actual time that it takes your business to recover. Thus, if you’re proactive and you can return to the ordinary course of business in a few days or weeks, then your insurer will cover you for losses and expenses during that time. However, in some cases insurance companies have successfully argued that the restoration period should only consist of a “reasonable” amount of time. What is reasonable will depend on many factors such as: the extent of your damage, the nature of your business, your ability to operate under your present conditions, etc. Suffice it to say that you will be expected to resume your normal operations as quickly as possible.

Furthermore, when filing a claim time is of the essence. Your insurance company will want to investigate your claim, and alerting your insurer as early as possible is essential to reduce the chances of being met with friction by your insurer. Moreover, it is imperative that you document your losses as extensively as possible. If you file a business interruption claim, then you will need to be able to show your pre-interruption revenue, sales, profit margins, expenses, etc. If you are filing a commercial property claim, then you must document your damage, etc. If your merchandise has been destroyed then you will want to retain those damaged items to demonstrate to your insurer the extent of your loss.

Whatever your situation may be, rest assured that if your insurance company believes it is justified in denying or reducing your claim, they will do so. Thus, it is best that you prepare ahead of time (if possible), and remain proactive during the claims process. 

You can reach Miami Business Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].