Ask the Expert

A. Business-interruption insurance can help keep your business from going sour if something happens to your store and/or your stock. For example, if a fire damaged your building and all that candy went up in smoke, this insurance would cover your loss of earnings until the building was restored and you were back in business.

There are several kinds of business-interruption policies. Just like your home insurance, the policy can be either "named perils" or "all risk." Named perils covers losses caused by perils that are listed, or "named," in your policy; all risk provides protection against loss caused by any risk that is not specifically EXCLUDED (not covered) in your policy.

But just as important as the perils that the policy insures against is the period of time that it will pay for loss of business, called the "indemnity period."

One kind of policy -- often called a "gross earnings" -- pays only until the property or damage is replaced or repaired, or the stock is replaced. As soon as the business resumes, the policy stops paying, even if you haven't regained your previous level of earnings. Let's say you were out of business for two months due to an explosion in your building. During that time, your competitors may have snapped up many of your customers. Therefore, when your business resumes, you will not be operating at the same level as you were before the explosion, and yet your insurance will have stopped paying. Another version of this policy limits not only the period of time you can be covered, but also the amount payable in any one month. Although these kinds of policies are cheaper, they may not be adequate for your needs.

A "profits form" policy, on the other hand, continues to pay until your business resumes its normal, pre-interruption level, subject to the maximum period of indemnity. This kind of policy is more expensive, but may be well worth the price for many businesses.

Some business people may also need "extra expense insurance." This type of policy, designed for businesses that must remain operational during the period they are affected by damage, covers extra expenses that may be incurred in order to do so, like moving to other premises temporarily, or outsourcing work. This type of insurance may be more applicable to offices and other "movable" businesses, such as consulting firms and other service businesses.

The coverage you need depends on the kind of business you operate. Discuss it with your insurance provider and get your policy in place, before you open the doors of your candy store. Then, should disaster strike, it won't leave such a bitter taste in your mouth.

A. You should start by contacting your existing insurance provider. They may be able to assist you or may at least refer you to a commercial broker who handles this type of insurance. The types of coverage you need depend on the specific services you are providing. A broker or insurer who provides business insurance can give you more details about what specific types of insurance you require. 

However, there are some types of insurance that every business owner should consider. Two of these are office contents coverage and general liability insurance coverage. Other types of business insurance you may want to look into include personnel placement, errors and omissions (E&O) or information technology E&O.

In terms of the amount of coverage you will need, you should note that insurers do not normally insure a business for anything less than $1 million in liability coverage. Talk to a broker or your insurance provider to find out what amount of coverage is appropriate for your business.

A. Due to the nature of your business, it seems that you have a fairly high liability exposure because any client acting on your advice would hold you accountable if that advice led to a problem.

The question facing any underwriter is: How much should a business person pay for liability protection? In many cases it is best to base premiums on the amount of business you do. To get an accurate figure, the insurer is asking for a look at your books.

There is nothing that says you must comply with the insurer’s request, but, if you refuse, the insurer is not required to provide you with insurance.

It is possible that another insurer would base your premium on some other criteria. There is no set rule that applies to all insurers in this type of situation. If you would rather not share your financial records, it may be worth your while to shop around.

In terms of the amount of coverage you will need, you should note that insurers do not normally insure a business for anything less than $1 million in liability coverage. Talk to a broker or your insurance provider to find out what amount of coverage is appropriate for your business.