Business Interruption: Forgotten Coverage every Climbing Gym Needs
Posted by David Hamilton on Wed, Oct 19, 2011 @ 05:03 PM
When buying insurance for the Climbing Gyms, most Gym owners know the basics: Commercial Property, which protects the walls and equipment from perils like Fire and Theft, and General Liability, which protects against lawsuits arising out of Bodily Injury. However, there is a third coverage that is just as important and necessary: Business Interruption.
Let’s imagine for a moment that disaster strikes, and your Climbing Gym suffers significant property damage. If you have appropriate property insurance, the Equipment and Walls will be replaced by the Insurance coverage. What often gets forgotten is that this replacement doesn’t happen overnight, and your gym is going to be closed until it is replaced, resulting in lost revenues. And with most expenses continuing during the downtime, losing these revenues can be fatal to a business.
For example, in the fall of 2010 True North Climbing experienced a unique situation: A sprinkler head was knocked loose by a climber, resulting in water pouring out all over the safety mats and the walls. The mats and the walls themselves weren’t significantly damaged and didn’t need to be replaced, but the facility was forced to close for 11 days until everything dried out. With Business Interruption coverage in place, the gym was able to recover their lost revenues and continue to pay their ongoing expenses.
“We didn't initially have business interruption insurance, as I had assumed it would be expensive and my previous broker didn't explore it. When Brent showed me how little it actually costs, it seemed worthwhile. A few weeks later we had our sprinkler crisis, and I realized how important that coverage was. We were able to pay our staff for most of the time they would have worked while our facility was closed, and the insurance covered most of our losses during that time.” from John Gross - Owner at True North Climbing, Toronto, Ontario
We highly recommend that every Gym carries this coverage. True North was closed for 11-days, but what if you had to close for 11-days or more? Could your business survive?
How it works
As discussed, a property insurance policy only covers the physical damage to the owned assets of the business. Business Interruption protects against the lost revenues during the downtime of re-construction, in an effort to make the business whole, as if no loss had ever occurred.
What is covered by a Business Interruption Policy?
While it always depends on the wording, Business Interruption often covers the following:
- Lost Profits
- Fixed Operating Costs
- Ordinary Payroll up to 90 Days (this is an optional add-on)
- Temporary Locations
- Extra Expenses
As we can see, Business Interruption coverage fills in a sizeable gap left by a standard property policy, and could make a large difference to your business in the event of a disaster. If your Gym does not carry this coverage, I encourage you to contact us immediately for a quote.
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Our service is friendly and knowledgeable: please contact us, we would love to hear from you –
If calling from East of British Columbia, contact Brent Brandham at 416-642-3293 or e-mail Brent@frontrowinsurance.com
If calling from British Columbia, please contact David Hamilton at 604-684-3456 or e-mail david@frontrowinsurance.com
If calling from the United States, please contact Michael Groner at 818-643-3830 or e-mail mgroner@jonesbirdsong.com