Business Insurance Checklist Part 2

3. Waiting Periods

Waiting periods can be from 8 hours to 7 days, and sometimes more. These periods are common in insurance policies, and mean that during that length of time directly after the disaster, losses are not covered.

Barron Wall is the managing associate of Insurance Consulting Associates. He says, "Many policyholders who suffer their greatest income loss and expenses during the first hours and days following a disaster subsequently realize... that their policies will not cover the losses incurred because of this 'waiting period' provision which operates as an unquantified deductible.... Business owners should try their hardest to eliminate any waiting period provision for any type of business income coverage, and instead have a known 'dollar' deductible based on their own level of risk tolerance."

It's much better to have a deductible instead, even though it means you will have to pay a certain amount of your expenses out of company coffers. However, you will know exactly how much this is and will be covered for everything after that amount.

4. Extended Period of Indemnity

Some policies only cover disasters until the doors are once again open for business. However, sometimes the losses continue beyond this point. If you don't have an extended indemnity clause, you will not be covered for these.

Gander warns, "Often in the case of a catastrophic event, like the events of September 11, revenues for businesses are reduced over an extended period of time. Just because a business opens again doesn' t mean revenues will immediately jump back to normal."

5. Exclusions and Limitations

This is one of the confusing areas of insurance. You should comb over your insurance carefully to make sure you know what is not covered. If there is something you need in your policy, get it added in. You don't want to think your covered for something and have it be excluded.

Michael Rodman, a principal consultant with J. H. Albert International Insurance Advisors, Inc. tells us that common exclusions can include loss of cash, employee theft, loss of computer equipment, and even forgery. Read your policy and get a second person to do the same—it will be worth it.