Business Interruption Insurance for COVID-19 is not something that was in the cocktail conversations of business owners prior to a month or so ago. But now, it is a hot topic to consider. Even if just in the context of preparing for the next problematic national or world event.
Many business owners have inquired with exasperation during this time of the COVID-19 shut down and quarantine, what can I do about lost business income?
Business Interruption Insurance?
The first question I ask them is – do you have Business Interruption Insurance? Some do… some don’t… and some have never heard of such a thing. The worst part of this conversation is when I speak with business owners who actually do have business interruption insurance. Some are simply being told by their carrier that they are not covered! These policies (like all insurance policies) can be tricky… and often filled with endless loopholes. But just like any other product… we like to get what we paid for! Even when it comes to insurance.
Now, certainly circumstances will influence how coverage is treated. If your business shut down is voluntary and precautionary that will come into play (especially in the eyes of the insurance carrier). Is it because you don’t want to unnecessarily expose your workers? Or in reverse, they don’t want to risk being exposed? What if your business shut down is due to a State, or Federal government declaration that businesses in your industry or area must temporarily close. Perhaps your Governor has mandated that no more than a certain number of people may congregate at one time. A limitation which in-and-of-itself nullifies your ability to operate a sustainable business.
What if I’m forced to shut down?
In the case of government mandated closure… a Business Interruption Policy should in most cases, be effective and enforceable. But unfortunately, even in these cases, the insurance carrier’s initial position may be to deny coverage. Then you’ve got a fight on your hands!
What to do in the interim? I would say to definitely keep track of average lost revenue stats. Keep track of… and a close eye on expenses. This is a fluid situation in uncertain times. The rules are being created as we go.
A key conversation business owners are having with each other, is do I keep charging monthly fees or subscriptions during this period of shut down? This is also a conversation they are having with accountants like me. Here are some of the hard questions out there. Do I accrue my services owed to customers forward? Do I suspend current billing with mutual customer agreement and catch up on deferred billing later? There are no easy answers. Business owners need to get paid. But looking long-term, it’s important not to lose customers. Especially, those that have been with us a long time. We are all juggling the same budget constraints. Small business owners and consumers alike are doing the austerity dance. Balancing family first, being fair with our service providers and good citizens of our community and world.
Business Interruption Insurance COVID-19
These are hard economic times for everyone… the consumer, business owner, the entire community. Sometimes the best lessons learned are those that will be applied forward to the next catastrophe. Do you research with due diligence, but perhaps a look into whether a Business Interruption Insurance policy is an affordable and viable option for you, might be something to do in these dark, down times.