Business Interruption for Restaurants: Opening the Doors After a Loss

After Super Storm Sandy hit the East Coast five years ago, many restaurants suffered devastating property damage. But even more restaurants experienced significant business interruption losses including those resulting from downed power lines and outages. In addition to securing responsive Commercial Property insurance to step in to help a restaurant rebuild after a property damage loss, ensuring that Business Interruption coverage is included as part of a comprehensive program can be the difference between closing down for good or hanging up the welcome sign again.

Estimates from the National Association of Insurance Commissioner (NAIC) suggest more than 30% of all businesses that suffer a ‘catastrophic loss’—one that causes them to close for more than 30 days—will never reopen, and another 25% will close within three to five years.

Mortgage payments still have to be met, rental expenses continue for the building, machinery and equipment, and employees expect a paycheck or they’ll begin searching for other jobs.

Business Interruption insurance, which is also known as Business Income, will step in and pay for lost income and fixed expenses, among other costs, to a restaurant that has to cease operations due to damage from a covered event under a Property insurance policy, such as a fire. For restaurant operations, it’s also important that coverage is available in the event they close due to power failure and damage to overhead transmission lines. 

Business Interruption coverage is designed to help keep businesses afloat until they can resume normal operations. Yet as the needs of each restaurant operation vary, agents and brokers should talk to their clients about their specific requirements to customize their Business Interruption insurance. We have provided a brief write-up, “Understanding Restaurant Coverage: Business Interruption,” you can share with your restaurant clients to help them gain further insight into why this coverage is so critical to the ongoing success of their operations.

 Distinguished’s Restaurant Package includes Commercial Property insurance along with Business Interruption coverage. We insure everything from fine dining to family dining, catering, and wine bar risks.

Source: Independent Agents Magazine