Time element insurance coverage is so named because it protects your business from losses it experiences when your business property is damaged and you can't use it as usual. For example, if you own a printing firm and your printer breaks down, time element coverage will compensate you for the losses associated with the printer failure. The coverage is so named because the extent of the loss is proportional to the time taken to fix the damage. Here are some of the various forms of time element coverage:
Business income coverage
If a property that is normally involved in direct income generation is damaged, it follows that you will lose the income until the property is fixed. For example, if you run a construction company and one of your earthmovers is damaged, you will lose the income you would have earned from the earthmover until it is repaired. In this case, business income coverage insurance can compensate you for the loss associated with the earthmover breakdown.
Before buying such coverage, understand the terms and conditions so that you know exactly what risks are covered. You also need to understand that you might not be compensated for losses occurring within the first few days of the loss. Such a gap period, called a waiting period, is common with some (but not all) business income policies.
Extra expense coverage
If one of your business properties is damaged, the expenses you may incur in fixing it and getting back to work are likely to be more than the actual expense of repairing the damaged equipment. You may also incur extra expenses to minimize the damage or start operating as fast as possible before the restoration of the damaged property is complete. For example, if you have suffered flood damage, it may be prudent to rent a temporary location to continue operating while flood remediation is taking place. Extra expense coverage will help you pay for these extra expenses to minimize your original loss and ensure you get back to work as soon as possible.
Leasehold interest coverage
Some disasters can render a property uninhabitable, forcing the businesses operating from the premises to relocate. For example, if an earthquake causes a wall to crack from the top to the bottom, building safety inspectors may order an evacuation. In cases of severe damage, the building may have to be brought down if it is deemed irreparable.
This can be disastrous for you if your business was one of the ones operating from the damaged premises, especially if you had an attractive lease that was below the prevailing market rates. In such a case, you will be forced to seek an expensive lease elsewhere to continue with your business operations. Leasehold interest coverage will help you cover the financial losses associated with the lease termination.
For more information, contact companies like Scovotti Insurance.