Business Income Coverage: A Critical and Often Overlooked Area of Property Insurance

We are always amazed that while lenders and business advisors insist that business owners carry adequate all-risk (open peril) fire insurance, they often overlook business income and extra expense coverage. Commercial landlords often include lease terms that require tenants to carry fire insurance (especially on a triple net lease), but they typically do not also require insurance for business income or a loss of rental income.

The main purpose of owning commercial property is to receive the revenue it generates, and if that revenue is not insured, the effects can be catastrophic. Thus, it is important for business owners and those with an interest in their properties to make sure their investment is fully protected, not only with insurance for the brick and mortar property itself, but also for the stream of revenue it generates. This article highlights a few key features of business income coverage, with a focus on how the coverages work and key provisions to evaluate in putting together a well thought out property insurance program.