Business Interruption Insurance

Hi, I'm Donna Bordeaux with campgroundaccounting.com I wanted to take a moment to talk to you about business interruption insurance today. Business interruption insurance protects you if there is a loss where you are unable to operate your business and earn your revenue. So if you suffer a loss like a fire, for example, where you are unable to open your campground, or a piece of your campground is not able to operate, you can redeem proceeds of insurance to help recover the missed income opportunities that you had during that time frame when you're rebuilding or repairing to get back up into full operating procedures. So when you look at that insurance, make sure that you're protecting the right things. Now, what are your insurance agents going to ask you about? Well, I've talked with the good folks at Levitt Insurance, and they specialize in working with campgrounds and they've given me some info for you I want to pass along. First off, you want to make sure that you have a solid set of books and records to be able to apply for this insurance, as well as to be able to get the proceeds if you had a loss. You'll need to be able to provide accurate records to show what your income truly is by segment. You'll also need to show the timing of that income, especially for taking into account seasonality. And you'll need to be able to show what your current income looks like when it's time to collect those proceeds if you had that loss. So in our case, we're going to help keep a solid set of books and records. A financial statement, especially those prepared by a cpa, are going to be able to speed that process along and make sure that you're able to get the right insurance coverage for your investment, as well as get the proceeds if a loss should ever happen. So we can specialize by helping you keep up with those financials and having a solid set of books and records that can provide that information in a moment's notice if needed. The other problem that they see a lot is not only do people not have that information to even apply for the insurance, they also don't have the information to support a claim if there is one when that time comes. Obviously, if you've suffered some sort of a loss, you've got a lot of things on your plate. And I'm sure going back and doing accounting is not going to be one of your top priorities at that moment. So you want to make sure that you have a great system in place where that information is always readily available. That will also help you make better decisions in your campground all along the way. So working with a professional like us to make sure that you're well taken care of in that arena will pay back and give you a solid set of returns on that investment. You'll want to make sure that you have at least three to five years of financial statements available to both apply for the insurance and also if you needed proceeds from a claim. With this, you want to make sure you also have a good reservation system. One of the things they're going to ask you about is the segments of your income. So if you have a store, if you, if you have campsites, cabins, they'll need to know the breakdown of that. So if you suffer a loss in a store, for example, but you can still rent out your cabins and maintain your reservations that you've taken for the campground, that's something they'll need to know to be able to give you the proceeds. So it's important to have good records to look at the sources of that income as well. So if you have a loss like this, one of the things you're going to want is a very timely payout. And again, don't add to the burden by having to do accounting at that point. You want to have this always ready to go. Also, one thing I hear quite frequently, don't short the IRS and try to hide money so that you don't have to pay income taxes. This will come back to bite you in multiple ways when we talk about this business interruption insurance. If you were to need that money from your insurance company and you have not claimed it on your taxes and in your financial statements, you're not going to get the insurance company to give it to you either. So you'll be short changing yourself. Also, I see it over and over again at the sale time for a campground. If you're claiming that you have additional sources of revenue that aren't in your financial statements, guess what? You're going to lose that money probably four or five times that amount in the sale proceeds. And you're also going to give a potential buyer a reason to question your judgment. Looking at the numbers that they're going through in the due diligence, you may make yourself a much harder deal or knock out a deal that could have potentially been something that you really wanted. So talk to the good folks at Levitt Insurance. They will help you line up the best insurance policies for your campground. And I will be happy to help you at campground accounting to make sure that we have good, solid sets of books and records to make sure that that insurance is worthwhile and pays off for you in the event of a loss. And make sure that you're saving a lot of money on taxes and growing the value of your campground to its ultimate potential. Thank you very much. I'm Donna Bordeaux at Campground Accounting.