According to The Chicago Tribune, on August 26, 2015, a grease fire at the restaurant Adobo Grill in Chicago spread to Second City, a beloved comedy club, theater, and improvisation school. The venue's upstairs offices were damaged in the blaze, but luckily, the theaters remain intact, save for some water damage, smoke damage, and debris in the common areas.
The report states Second City has to cancel its performances through Labor Day weekend and close the building, which means it has to:
- Issue refunds for the shows.
- Hold improv classes off-site.
Additionally, the comedy theater notified part-time employees about the temporary close and informed them they would be paid for lost hours plus estimated tips.
The Chicago Sun-Times reports that the theater usually makes around $180,000 in ticket sales a week, and it lost about $60,000 in sales from food and beverages for the week. The report also notes that Second City is well insured, which has made post-disaster cleanup a much smoother process. We speculate the club might even have Business Interruption Insurance, which can help a business get back on its feet by helping to pay for lost income during a shutdown.
Business Interruption Insurance: Helping Businesses Bounce Back
Let it be known: your business's survival plan shouldn't just involve purchasing an insurance policy and tuning out. Contingency planning can ensure your business suffers fewer losses and can offer a blueprint for how to handle the fallout.
For example, contingency planning might be something as simple as backing up data and storing important documents at another location. That's what Second City did – the report states it kept its historical archive and production photos at an off-site location, which saved them from being destroyed in the fire. You can learn more about what a disaster plan might look like in "What's Your Business Interruption Plan?"
Business Interruption Insurance is the cherry on top of any continuation plan. That's because it can help pay for:
- Lost income during a shutdown caused by a covered Property Insurance event.
- Relocation costs so the business can operate at an alternate location during repairs.
That first point is worth noting if you're thinking about purchasing this coverage. Because Business Interruption Insurance is a Property Insurance endorsement, you must have a Commercial Property Insurance policy in place first. That way, when a fire, windstorm, or theft brings your business to a halt, you have a two-pronged insurance approach to pick up the pieces:
- Your Property Insurance can pay to repair your building and replace your insured equipment and furnishings.
- Your Business Interruption Insurance can pay for the ongoing expenses (e.g., employee salaries, rent, loan payments, and taxes) while your business is unable to generate revenue.
If you want to save money on these coverages, ask an Insureon agent if your business qualifies for a Business Owner's Policy. A BOP usually bundles General Liability, Commercial Property, and Business Interruption Insurance together at a reduced rate.
It's Not You, It's Your Neighbors
You can do everything right and still have to bear the consequences of someone's negligence, mistakes, or misfortune. In Second City's case, its restaurant neighbor was responsible for the fire, but that didn't keep the comedy theater from feeling the burn.
Similarly, you may face an interruption if a covered property event shuts your supplier down (Contingent Business Interruption Insurance can address your losses in that scenario). It goes to show you: disasters often trigger a domino effect. When one business is affected, others usually feel the impact, too.
That's why insurance is a smart failsafe. You can't control your neighbors or suppliers. You can only plan for the worst and hope for the best.