Physician practices and business interruption insurance

Most people would never consider opening a business or practice without buying insurance to cover damage due to fire and windstorms. However, too many physicians fail to think about how they would manage if a fire or other disaster damaged their premises so that they were temporarily unusable. Just ask those doctors whose offices have been destroyed or damaged by a hurricane.

Business interruption coverage is not sold separately – It is added to a property insurance policy or included in a package policy. An physician office that has to close down completely while the premises are being repaired may lose out to competitors. A quick resumption of business after a disaster is essential.

What Is Business Interruption Insurance?

Business Interruption insurance (BI) is a form of property insurance compensates you for lost income if your company has to vacate the premises due to disaster-related damage that is covered under your property insurance policy, such as a fire. The Building and Personal Property Form protects an insured’s Building and personal properties in it from damage like fire, theft, broken pipes and other minor disasters. It pays to replace them.

BI insurance protects the insured income and continuing expenses. It pays the insured cash–cash you would not get because your business stopped as a result of a covered peril. Also, BI insurance covers the profits you would have earned, based on your financial records, had the disaster not occurred.

Why Do You Want Business Interruption Insurance?

Fire puts a lot of businesses out of business, not because they can’t rebuild, but because they don’t have the cash flow necessary to stay in business. BI insurance provides that cash flow. Policy limits should be sufficient to cover your practice for more than a few days. After a major disaster, it can take more time than many people anticipate getting the business back on track. The price of the policy is related to the risk of a fire or other disaster damaging the premises where your medical practice is located.  

How Do You Obtain Business Interruption Insurance?

Work with your insurance agent/company and accountant to figure out your exposure (risk to a loss) such as how long it would likely take to rebuild your office, what net income would you lose in that time period, what expenses you would incur, and what expenses would increase. You might also extra expense insurance which reimburses you for a reasonable sum of money that you spend, over and above normal operating expenses, to avoid having to shut down during the restoration period.

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