Business Income & Extra Expense Coverage for Restaurants
1. GENERAL DESCRIPTION
All American Agency Facilities offers, through Guaranty National Insurance, protection to restaurants against loss of income and extra expenses incurred as a result of an outbreak of any food borne illness. Such illnesses include Hepatitis, E-Coli, food poisoning in general, etc. The program is exclusive to All American Agency Facilities and is written on a non-admitted basis in most states.
Unique features include:
1. Coverage during the period of shut-down and during the period of recovery, for up to six months.
2. Coverage for extra expenses such as advertising to bring the business activity back to normal.
3. Coverage for all scheduled locations, not just the one where the incident occurred.
4. No coinsurance or monthly limitation.
2. CONTACT
Mr. Evan Sorby All American Agency Facilities 8060 165th Ave. N.E. Redmond, WA 98052 206/883-2900
3. UNDERWRITING GUIDELINES
Information not provided.
4. AVAILABILITY OF COVERAGE
All states.
5. COVERAGE
LIMITS AND DEDUCTIBLES AVAILABLE. Up to $3 million per location and aggregate.
DEFINITIONS. The following terms are defined:
A. Business Income—the net income the insured would have earned and continuing operating expenses, including payroll.
B. Operations—the insured's business activities at all covered locations.
C. Dependent Property—a location scheduled on the policy "directly affected" by a covered cause of loss at another listed location.
D. Announcement—a public statement that a covered cause of loss has occurred at one of the insured's covered locations. Such an announcement may be made either by the insured or the news media.
E. Covered Cause of Loss—actual or alleged food borne illness.
F. Period of Indemnity—begins with the announcement and ends when the business is restored to its level of business income prior to the announcement. A maximum period of indemnity is specified on the declarations.
G. Food Borne Illness—illness, sickness, or disease transmitted through the consumption of food or drink contaminated as the result of viral, parasitic, or bacterial exposure.
H. Location Covered—specified in the declarations.
I. Extra Expense—all necessary expenses incurred to reduce the business income loss.
INSURING AGREEMENT. The policy promises to pay the actual loss of business income sustained by the insured as the result of an announcement of a covered cause of loss. It also pays any extra expense incurred by the insured to reduce the amount of business income loss.
WHO IS INSURED. The named insured.
WHAT IS INSURED. The policy covers loss of business income and extra expense incurred as the result of an announcement of a food borne illness at any of the insured's scheduled locations. The policy also covers extended business income, beginning on the date that the insured resumes operations and ends when operations are fully restored (or at the end of the period of indemnity).
PERILS. The only peril covered is an actual or alleged food borne illness.
EXCLUSIONS. The following exclusions apply to this policy:
A. The cost of replacing contaminated food or the expenses of removing such food from the premises.
B. Fines or penalties.
C. Seizure or destruction of property by governmental authority.
D. Nuclear.
E. War.
F. Increase in loss or delay in resuming operations caused by strikers.
G. Dishonest or criminal acts.
CONDITIONS. The following conditions apply:
A. Limits of Insurance.
B. Loss Determination. Four items go into the calculation of the business income loss:
1. Net income prior to the "announcement."
2. The likely income if no loss had occurred.
3. Expenses (including payroll) incurred to resume operations.
4. Other sources of information, such as financial records, receipts, and deeds or contracts.
The amount of extra expense payable is what the insured spends to reduce the amount of the business income loss. These expenses are subject to approval by the insurer.
C. Loss Conditions. The following loss conditions apply: appraisal; duties in the event of loss; and loss payment. The appraisal condition is similar to appraisal provisions in other insurance policies. Losses are payable within thirty days.
The following are the insured's duties in the event of a loss:
1. Give "prompt" notice of the announcement and any affected covered locations.
2. Notify the appropriate public authorities.
3. Give the insurer a description of how, when, and where the food borne illness was first discovered.
4. Resume operations as quickly as possible.
5. Send a signed, sworn proof of loss.
6. Cooperate in the investigation.
7. Permit the insurer to examine the books and records.
6. POLICY CONDITIONS
A. Cancellation. The insurer may cancel with a ten-day notice for nonpayment; with a thirty-day notice for any other reason.
B. Changes.
C. Examination of Books and Records.
D. Inspections and Surveys. The insurer has the right (but not the obligation) to conduct such inspections and surveys.
E. Premiums.
F. Transfer of Rights and Duties.
7. OTHER COMMENTS
Many times, an incident at one restaurant may affect business at other restaurants in the chain. The insurer recognizes this fact with the "Dependent Property Adjustment Endorsement." The policy pays for loss of business income at a dependent property when that property's income is reduced by more than 5 percent as a result of the announcement.