Business Interruption (BI) is an often-overlooked coverage that provides ease to financial losses that can arise from a variety of incidents that an organization may experience. Here are some examples of incidents that may benefit from BI coverage:
- Equipment breakdown
- Cyber breach that shuts down an organization’s network
- Insured peril loss to physical building that generates revenue
With these exposures, we strongly recommend that you review your Business Interruption exposure.
What Is Business Interruption?
Business interruption is when your property (income generator) sustains an insured loss as per your insurance policy with your business operations and their income temporarily interrupted during the time of repairs.
What Does Business Interruption Insurance Cover?
During business interruption, your property policy will respond to the physical damage sustained to your building while your business interruption coverage covers the loss of income that your property generated prior to the insured loss.
What Limit of Coverage is Available?
For municipalities, gross earnings coverage is automatically included, but with a limited amount. We encourage you to contact your Member Service Representative to assess whether your existing limit meets your needs or if additional coverage is required. Business Interruption coverage can be structured based on rental income, gross earnings, or profits.
For non-municipal members, Business Interruption coverage is available for rental income, profits, and gross earnings, but it is only provided if reported on the Statement of Values.
Profits Coverage covers lost net income plus ongoing expenses during the interruption period. Coverage continues until the business returns to pre-loss income levels (subject to the policy limit and indemnity period). This option is best for members who prioritize maintaining overall profitability and seek to ensure financial stability.
Gross Earnings Coverage covers lost revenue minus non-continuing expenses until operations resume. The policy provides coverage for the “actual loss sustained” up to the declared limit (typically 12, 24, or 36 months), based on how long it takes to restore operations. Coverage ends when the business is operational again, even if income has not fully recovered. This coverage option is best for members needing a quick recovery for operational expenses and essential costs.
Gross Rents Coverage covers lost rental income, including ongoing operating expenses that continue during the interruption (e.g. mortgage payments, property taxes, maintenance costs). This coverage option is best for property owners or landlords who depend on rental income to cover fixed expenses.
How Much Does Business Interruption Insurance Cost?
Additional premium for Business Interruption Insurance is calculated on a few factors (type of business operation and yearly revenue generated). Please reach out the RMA MSR team for more information and to inquire about the application process.
Please reach out to your Member Service Representative or the RMA Risk Advisors for any questions or inspection requests.
Vay Diep
Risk Advisor
825.319.2250
vay@rmainsruance.com
Chris Dyer
Risk Advisor
587.943.6949
chris@rmainsurance.com
Temi Alao
Risk Advisor
825.319.2251
temi@rmainsruance.com
Victoria Eisener
Risk Advisor
587.797.4253
victoria@rmainsruance.com
Kal Aboumorad
Risk Advisor
825.319.2348
kalid@rmainsruance.com