CSD Pool Update

Ask the Experts: Business Interruption Coverage

Insurance topics can be confusing. This is where we hope to fill in those blanks by answering common questions about our coverages and programs.

Is there coverage for extra expenses when my facility is damaged?

The quick answer is yes! We all know that we’ll be compensated for scheduled property that’s been damaged due to a covered incident. But what about money lost because your employees and patrons are not able to use facilities while they are being repaired?

For example, if a park district’s skating rink was damaged in a fire, there could be a loss of revenue during repairs. Take as another example a fire district’s office is closed due to flood. There could be expenses associated with keeping their doors open by moving to a temporary location.

Business Interruption coverage provides for lost income and extra expenses including payroll. Your district must independently consider whether or not to temporarily sideline employees during an interruption, but this coverage can help cover those payroll costs during that time.

These costs could include providing transportation or lodging for employees if they need to work at a different worksite, especially during disasters if a facility, or even an employee’s residence, is no longer accessible. The cost of remaining in business could also come with additional utility bills and payments for rented equipment. Extra Expense coverage helps to lessen these frustrations and can keep your district’s daily operations running smoothly.

In the event of a covered loss, the Pool provides up to $250,000 for Business Income, Normal Payroll support, and Extra Expense payments while repairs are being made, but that may not be enough. These expenditures can be very costly, and a budget overrun could be just as detrimental to your district as discontinued services.

Determining the appropriate coverage for your property depends on the type of business your district conducts. Ask yourself: do you depend on user fees? Where does revenue come from when facilities are damaged or not accessible? Can you afford to halt operations if a building cannot be accessed and requires extensive repairs? Depending on these answers, you need to consider the extent of the increased costs that utilizing “backup” options could create.

We recommend completing our Business Income Worksheet to assess the exposures and costs districts would likely incur in such a scenario. You’ll find a link to that on our website. If you feel that the standard $250,000 in coverage isn’t sufficient, feel free to reach out to your broker or the Pool to discuss available options.

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