|The following is an excerpt taken from the article, “3 Types of Insurance You May Think You Have But Don’t”. For more information please visit www.sba.gov.|
Insurance is the backstop for business owners when things go wrong. Things happen, but owners want to be financially protected for the unexpected. The problem is that owners may assume they’re covered for certain events but find out after such events that they were mistaken. Don’t fall into the same trap. Here are three common situations you may assume you’re covered for but may need to make changes to be protected.
You’re a restaurant owner whose windows have been blown out by a terrorist’s bomb. Or you have a medical office but patients can’t access your office because the street is closed following a terrorist attack. Will your business insurance policy help you? It depends.
After the September 11 attacks, insurance policies were clarified to exclude coverage for property damage resulting from terrorist attacks. However, businesses can obtain coverage for such events by paying extra. The *Wall Street Journal reported that about 60% of companies across the country do carry additional coverage for terrorism. Unfortunately, many small businesses don’t because of the added cost.
So are you covered or not in an event such as the Boston Marathon bombings? It depends on whether this is officially certified to be an act of terrorism. The Terrorism Risk Insurance Program Reauthorization Act was passed post-9-11 to help insurers pay for terrorism claims. Under this law, terrorism coverage is now necessary for claims resulting from an act of terrorism and basic coverage does not provide protection if the Treasury Secretary, the Secretary of State and the U.S. Attorney all certify an event to be an act of terrorism. Note: This law is set to expire on December 31, 2014, but could be extended by Congress.
Even if you have terrorism coverage, it may only provide protection for property damage. You usually need a separate business interruption policy to protect you for lost profits resulting from acts of terrorism and the aftermath. Business interruption insurance pays for your operating costs (e.g., rent, utilities and wages to employees) in addition to the profits you would have earned during the period your business was forced to close. Find more information about business interruption coverage from *InsureU.