No Money Coming In?

Things happen. Storms or fires may shut your business down. Or you may become physically or mentally incapacitated and unable to run your business. How will you continue to pay your employees' paychecks and other expenses? Planning ahead with the right type of insurance coverage can be a big help during a difficult time; it may mean the difference between surviving a temporary crisis and permanently going under.

Business continuation coverage
If catastrophe shuts down your business, business continuation insurance or business income insurance will provide cash to pay your bills while you are out of operation. Usually, coverage kicks in after a 72-hour closure, but each policy can be tailored for a business' unique needs. There are two basic types of coverage:

1. The 120 plan, which pays unlimited normal expenses up to the average net income of the business for up to 120 days after the loss (following the 72-hour period). Payments cease after the earlier of the reopening of the business or 120 days.
2. The monthly limit of indemnity plan, where the fixed payout of the policy (e.g., $100,000; $250,000, or other amount) can be disbursed according to the owner's needs.

The policy requires the owner to carefully estimate income and expenses and work closely with an agent to obtain the appropriate amount of coverage.

Disability overhead insurance
A business overhead expense insurance policy covers eligible overhead expenses during a period of the owner's disability.

Companies offering such coverage include:

• Mass Mutual
• The Guardian

Final thought
The cost of coverage isn't cheap and owners on a shoestring often pass up these policies, hoping for the best. However, it's usually a better strategy to plan for the worst by having adequate coverage to ensure the continuation of the business when catastrophe strikes. At the very least, owners should talk about this coverage with their insurance agents and do a cost-benefit analysis.

Read more at www.barbaraweltman.com