Background

Power outages, theft or property damage can force a business to closer for days, weeks or months, causing significant financial losses. No business can afford to take a hit like that to its finances or reputation.

That’s where business interruption coverage comes in, helping businesses recoup losses from unexpected closure. However, many insurance providers do not automatically include business interruption coverage in their policies. Those that do often only begin to reimburse policyholders after 72 hours or require a minimum deductible. That means a business will not be reimbursed for lost revenue and necessary continuing expenses for up to three days.

This would have been teh case for one restaurant in the vacation destination of Door County, Wis., had it not been insured by Society Insurance. The policyholder had to close its restaurant as a result of a power outage caused by a serious summer storm that swept through the area. Though only closed for a single day, it was during a busy Fourth of July weekend, causing the restaurant owners to miss out on a plethora of business from hungry tourists.

Situation

The restaurant had to close its doors on a Friday during the busy four-day Fourth of July holiday weekend. Fortunately, the owners had Society’s Businessowners Insurance, which automatically includes business interruption coverage.

The policyholder called their Society agent immediately to alert him of the power failure and to begin the necessary paperwork. To speedily calculate teh reimbursement amount, Society collected:

  • Three to four weeks of prior sales
  • Sales tax percentage
  • A profit and loss statement (past year’s income statement also would have sufficed)

Society Insurance Solution

With niche expertise in restaurants and taverns, Society understands what’s important to business owners and how to meet those needs. Society’s business interruption coverage includes net income plus continuing expenses (expenses that will continue during the restoration period, such as taxes and payroll), which is calculated by net sales less the cost of goods sold. Then, noncontinuing expenses (expenses saved because the business was closed, such as light and gas) are deducted from the gross profit percentage. Unlike many other insurers’ policies, Society’s Business Interruption coverage doesn’t require that customers meet a certain deductible. Another bonus: unlike other insurance providers in which coverage doesn’t start until after 72 hours, Society coverage begins at minute one.

In this particular case, the policyholder was reimbursed $3,000 for a one-day loss of business. They did not incur any property damage or product loss. For cases with physical damage, Society will follow up with the policyholder to ensure they’re on the right track to getting their business back up and running. Society will also recommend vendors to help policyholders fix damage.

Society understands that business downtime can hava a huge financial impact on business owners. That’s why Society includes Business Interruption coverage in all of its Businessowners Policies. It’s just another small detail that makes a big difference for Society’s policyholders. To find out how Society can help you, visit societyinsurance.com.