A Note on Business Income

While most restaurants have seen their revenues return to pre-COVID levels, given continued volatility in food and labor costs, business income values remain unstable, according to Lindsay Shipper, managing director and Southeast Zone Property leader, Marsh.

“To ensure accurate value reporting, and therefore accurate coverage limits, we encourage our restaurant clients to employ a forensic accountant to complete a thorough business income study. These studies factor in revenues as well as costs, to ensure accurate values based on the client’s current business operations, and can be updated as revenues and/or costs change to ensure continued accuracy.”

“Since COVID, communicable disease exclusions are the standard, and therefore no coverage is provided for pandemic. Other non-physical damage business income coverages, such as loss of attraction, cancellation of bookings, etc., have also been limited. The market has moved back to traditional business income coverage application, requiring a physical damage (such as fire, tornado, named storm) to trigger business income loss. Based on the current market conditions, we don’t expect to start seeing a broadening of non-physical damage business income coverages this year.”