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When Hurricane
Katrina slammed into the Gulf Coast, many
businesses were unable to operate for days or
weeks. Many companies have been aided in their
recovery by business interruption insurance.
Business
interruption coverage replaces lost business
income and pays ongoing expenses if you are
unable to operate due to circumstances
described in your policy But this isn't a
panacea for every possible disaster. For
example, your policy may cover business
interruption due to fire but not wind damage,
or water damage from rain but not from
flooding. And it probably doesn't cover losses
due to inaccessibility if streets are closed
by the authorities in the event of, say, a
potential riot or an imminent storm, although
if you are unable to operate after the streets
reopen, your coverage should kick in. Basic
policies typically stop paying damages at
recovery or 30 to 60 days after the property
is restored.
While
extended coverage is available, the greater
your coverage, the higher your premiums. And
no business interruption policy will cover a
downturn in the economy--even one related to a
natural disaster. It's best to make business
interruption coverage a component of an
overall disaster recovery plan that includes
financial reserves.
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