Businesses and other entities face many exposures to loss during their day to day operations.  Manufacturers have some unique circumstances which require good risk management and sound insurance treatment.

Loss of Business Income and Extra Expense

An often under-emphasized and misunderstood coverage for businesses is Loss of Business Income and Extra Expense(BI/EE).  Often referred to as business interruption insurance, BI/EE is even more important for manufacturers than building and contents insurance. 

Consider what would happen if your business was destroyed by fire.  Your building is gone, but will be rebuilt in four to six months.  When that's complete, it will take another period of months to receive machinery and equipment, retool, bring in raw stock and begin your manufacturing process to produce finished goods.  In the meantime, your customers are purchasing elsewhere.  Your operating cash comes from sales revenue.   No customers, no operating income!  What do you do?

You rely on BI/EE coverage.  It agrees to reimburse you your lost operating income, including profit, while you are rebuilding your manufacturing business from the ashes.   Continuing expenses are taken care of  such as payroll, line of credit payments, taxes, ongoing utilities, and other continuing business financial obligations.   Extra expenses are reimbursed (if they help reduce the loss of business).   These may include temporary manufacturing or warehouse rental expense, special advertising, and extra help.  Extended period of restoration coverage stretches your BI/EE payments for an additional period while you resume the same level of business as you had before the loss.

If you don't have sufficient working capital and retained earnings to make it through this period of business interruption and restoration, you need this insurance as much, or more than, building and contents insurance. 

Give us a call at 607-754-1411and we'll review your business interruption insurance needs. 

Ordinance or Law Coverage

Manufacturers who own large buildings and, especially, large older buildings, may be unaware of an exposure to loss that could cause substantial out-of-pocket costs. 

Property insurance policy forms grant coverage for repair or replacement damaged portions of buildings.  What if your manufacturing plant is damaged by fire to the extent of 60% of its area?  And what if your village, city or town code officer came to tell you to tear the rest of the building down and start rebuilding from scratch because your building was not quite up to current code?  Standard property coverage would pay for only the portion of your building that was damaged.  Are you stuck for the rest of the bill?

Not if you have Ordinance or Law coverage in your policy.  This coverage agrees to reimburse for three things the standard property form will not: 

	it reimburses you for the undamaged portion of the building that must torn down
	it reimburses you for the cost to demolish the undamaged portion
	and it reimburses you for the increase cost of construction to bring the entire building to code.

This coverage can be endorsed to standard property forms or it may be an integral part of a special manufacturers package policy.  In either case, setting up the proper amounts of insurance for each of the three sections of this coverage is an important part of your insurance and risk management program.  Call us and we will assist you.

Like to talk to us about these and other tailored coverages for manufacturers?  Just give us a call at The Partners Business Insurance Center at 607-754-1411.  Or e-mail us at info@thepartners.com

These coverage descriptions are general in nature and are not to be confused with specific coverage grants, conditions and exclusions made in specific insurance policies.  Please review your policies for specific coverage details.