Shore up Your Practice's Disaster Plan With Business Interruption Insurance

Hurricane season officially begins this week, and meteorologists predict a much more active 2010 season, with above-average threats on the U.S. Eastern and Gulf coastlines. Accuweather.com is calling for 16 to 18 tropical storms in total, 15 of which would be in the western Atlantic or Gulf of Mexico, according to its Chief Hurricane Forecaster Joe Bastardi.

If your home is damaged by a hurricane, fire or other disaster, your homeowners insurance policy will most likely cover expenses such as repairs to the home, replacement of lost property, and the cost of relocating if the home isn’t livable while repairs are being made. If your medical office is hit by a disaster, your business insurance will probably cover the same things. But unless you have business interruption insurance, it won’t cover a critical aspect of your practice -- the income lost and other costs you incur while you can’t see patients.

Business interruption insurance can cover you for loss of income as well as pay for certain fixed costs, such as mortgage payments, that would continue during your practice’s downtime. You can compare price quotes on business interruption policies at various insurance companies by checking out websites such as InsWeb.com.

When shopping for coverage, insurance experts say you should examine the policy carefully so you understand exactly what it will cover. Will the insurer pay for relocation to a temporary office, for example, or cover payroll for your staff? When it comes to replacing lost income, you should also be certain of exactly how the insurance company will calculate your income.

Also, ask about other policy terms, such as any waiting period before the policy kicks in and any limit on how long a break the policy will cover. Most policies include a 48-hour waiting period before coverage begins. The policy will likely have a deductible or co-pay, or both. (As with other forms of insurance, the higher you set the deductible limit the lower your premiums.)

Be sure to check for policy exclusions, or when and why you might not be covered. And consult with an insurance agent to find out if combining business interruption insurance and homeowners insurance with other policies, such as auto, marine and life, can save you money. Many practice management consultants recommend that you review your entire insurance package at least once a year to ensure you’re adequately covered in the event of an emergency.