Business Income and Extra Expense Coverage

Most gym owners think of business insurance as a way to protect against potential lawsuits or liability in the event of an accident. That’s correct for general liability and professional liability policies and that’s why those two policies are the most commonly bought.

Savvy business owners know that it’s also important to have a Property (sometimes called a Business Personal Property, or BPP) insurance policy. Not only does a Property policy help you replace expensive physical business assets, like weights, machines, and computers, it also includes sub-limits to reimburse your lost business income if your business operations are ever interrupted due to a covered event.

Known as the Business Income and Extra Expense Coverage, this sub-limit will look similar to this in your Property policy descriptions:

Business Income (and Extra Expense) Coverage

• Business Income Other Than "Rental Value"
  • Extended Business Income: 60 Days
  • Specified Limit of Insurance: 50%
  • Period of Restoration: 6 Months
  • Waiting Period: 72 Hours

Here’s what all of that means: Your policy’s Business Income and Extra Expense Coverage is designed to replace part of the income you lose when your business operations are disrupted by damage to your property—excluding income that would have been earned if you had rented it out. After waiting 72 hours from the occurrence of the loss, you can receive benefits for up to 6 months (the time it should take to get back on your feet), with an extra cushion of 60 days if needed, although the total amount paid out is capped at 50% of expected income.

How This All Works Together

1. Making a Claim: When your property suffers a covered loss that disrupts your operations, after a 72-hour waiting period, the policy starts to compensate for the income you lose.
2. Restoration Period: Payments are made to cover your lost operating income and extra expenses during the restoration period, which could last up to 6 months—this is the period deemed necessary for repairs or rebuilding.
3. Extended Income Coverage: If your business still does not return to full operation or if there are lingering effects after the primary restoration phase, the Extended Business Income clause provides an additional 60 days of income loss coverage.
4. Limits to Payout: All of these benefits (lost income and extra expenses) are subject to a maximum payout of 50% your declared revenue. This is the ceiling of what you can collect under this specific coverage even if the overall loss exceeds that amount.

Do you have a Property policy with Business Income and Extra Expense Coverage? Get your free quote online at www.gyminsurance.com.