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When disaster strikes: Business interruption insurance

As you start your Minnesota small business, you probably wonder what types of insurance policies you will need to protect yourself and your company. You may know that you need basic insurance to cover property, injuries and workers' compensation, but you may also find business interruption insurance helpful.

Several unforeseen events could cause you to have to close your business at least temporarily. Fires, tornadoes and hurricanes are just some of these events. Research shows that somewhere in the neighborhood of 25 percent of businesses forced to close their doors due to some calamity never reopen due to significant financial losses. That doesn't have to happen to you.

What benefits does this coverage provide?

When a catastrophe interrupts your business, you could turn to your insurance for help with lost income and other associated expenses. For instance, you may need to relocate your business operations at least temporarily, and your insurance could cover the extra expenses that arise in this event above your usual expenses.

How do I know how much coverage my business needs?

That primarily depends on the type of business you have and its expenses. When tackling the task of deciding how much coverage you need, consider the following factors:

  • Is your business in an area prone to disasters?
  • How frequently do natural disasters occur in your area?
  • How long would it take you to find another location?
  • How long would it take to get your business open again?
  • Do you rent space or a building or own it?
  • Is there a working sprinkler system?
  • How long could your business be displaced?

It may help to consider the worst-case scenario when determining coverage. Where a fire might displace your business for a month or so, a tornado, hurricane or flood could displace your business for an extended period.

What if I need to file a claim, but it's denied or undervalued?

As with any other insurance company, the one that holds your business interruption policy is in business to make money. The company may attempt to deny your claim or may say that your claim isn't worth what you believe. If you don't receive the benefits you need, your business could close its doors forever and may need to file bankruptcy.

The insurance company may offer you a settlement, but it more than likely won't be what you deserve or need. Before accepting any settlement offer, it may be to your advantage to discuss it with an attorney. After reviewing the circumstances and the offer, he or she could advise you whether accepting the offer would benefit you. If the insurance company denies your claim, you don't have to accept that as the final word on the matter. You could appeal the decision.

When disaster strikes your business, you don't have to deal with the insurance company and the other fallout alone. Contacting an attorney could provide you with the peace of mind you need that your business will continue well into the future.

 

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