Thoughts on MLK, civil unrest and business interruption

Published on Tue, 01/20/2015 - 20:35

The late civil rights leader Martin Luther King, Jr., once said, “The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.”

Unfortunately, there are plenty of challenges and controversies around us as we honor the memory of Dr. King this year. Incidents of civil unrest are on the rise across the country, with heightened tensions over recent police shootings and the resulting riots in Missouri, New York, and other places.

These incidents are creating serious concerns for business owners who happen to get caught up in the chaos. Many have suffered broken windows, fire damage, stolen property, or other collateral damage – and some have been forced out of business altogether.

These controversies are testing the measure of business owners – and of their insurance coverage.

What if a protest should take place right in front of your business? That could mean police blockades and unsafe conditions around the area of your business, putting you at risk for property damage and personal injuries. But even if you don’t suffer any physical damage to your operations, you’re losing money every day customers can’t walk through your doors.

Will you be prepared to get your business back up and running if you’re caught in the mayhem?

It’s a concern increasingly on business owners’ minds. In fact, according to the fourth annual Allianz Risk Barometer recently published by Allianz Global Corporate & Specialty S.E., business interruption risks are one of the top concerns of risk managers in 2015. Those concerns are putting a renewed spotlight on the importance of business interruption insurance.

Specialized risks need specialized protection

As a business owner, you wouldn’t think twice about insuring your property, equipment, and employees. But when it comes to insuring the ability to stay in business in the event of a crisis, many business owners let it slide. That’s a dangerous game. If an act of civil unrest unfolds outside your property and you suffer damages, your CGL policy might cover those damages – but it won’t cover your lost profits and many other expenses. That’s why you need specialized business interruption coverage.

What’s covered under BI insurance?

While BI insurance isn’t available as a separate policy, it can easily be added to your property policy or included in a Business Owner’s Policy. In general, BI insurance will cover:

  • Profits you would have earned if the crisis hadn’t occurred
  • Fixed costs such as utilities and other operating expenses you’re incurring during recovery
  • Relocation costs if you’re forced to operate from a temporary location
  • Reasonable extra costs above your fixed costs that let you continue to operate during recovery

But beware – even standard BI insurance won’t cover every eventuality, and some BI policies contain endorsements that exclude coverage for damages arising out of civil unrest. It’s crucial to work closely with your insurance provider to make sure you’re protected.

It’s clear we still have a long way to go in our society to realize Dr. King’s dreams, and the continued unrest makes it a challenge to predict what risks your business might face. Smart business owners and risk managers are taking steps to prepare for the worst, knowing that the right insurance is a crucial part of disaster planning.

If civil unrest should break out at your doorstep, that’s no time to find out you’re not covered. Partner with Heffernan Insurance Brokers and we’ll help you prepare with the business insurance resources you need to get back to business as usual.