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Business Interrupted by Algae Blooms? Here’s Help

Today we offer some information about the effects of the algae blooms in the Indian River Lagoon. Specifically, what can business operators do to mitigate their loss of income?

Will Your Business Be Interrupted?

Florida is known as a tourist economy, and rightly so.  People visit our beaches, waterways and attractions from all over the world. Here on the Treasure Coast, we share in those tourism dollars. Local businesses thrive by offering kayak tours, eco-adventures, charter fishing trips and more on and around the Indian River Lagoon. Ancillary businesses provide things like bait, equipment and advertising. Local restaurants feed those aquatic adventurers, some from riverside decks that offer great views of our estuary.  All of these businesses can be affected by the dangerous muck flowing into the Indian River Lagoon from Lake Okeechobee water releases.  The business interruption effects more than just the business, it impacts the lives of those who work there and their customers. So what is a business to do?

Can You Look to Your Business Owner’s Insurance?

If you can relocate your operation away from the affected area, that is one alternative. Some business owners may consider filing a claim under their business owner’s insurance policy for Business Interruption.  This coverage is a standard part of the Business Owner’s Policy (BOP). It typically covers lost income when you have to close your business temporarily because of events beyond your control. But how does it work?

According to the International Risk Management Institute (IRMI), certain conditions must be met before this coverage applies. A business has to show it sustained damage to its covered property caused by a covered cause of loss. The business has to show it was forced to completely suspend operations. The business has to show there was an actual loss of income. This can be tricky.  For a kayaking business, this could be easy to show with record of previously booked tours being cancelled due to toxic algae. They could show a loss of income with records indicating the average daily sales in previous years for that time of year compared to the current year.

Business Interruption coverage can also include loss of fixed costs still being incurred by the property while suspended, like wages, taxes and some operating expenses. Costs associated with establishing a temporary location can be covered as well.   Additionally, businesses can purchase Contingent Business Interruption Coverage that protects the business when one of its suppliers or customers incurs a loss, preventing them from engaging in normal trade.  For more information on this option, contact your insurance agent.

What Can Your Employees Do?

If your business cannot operate at all due to the algae problem, your employees will face a loss of income.  The State of Florida says they may be eligible for unemployment compensation.  Within a week of becoming unemployed due to a total business interruption, an employee can file for benefits.  The amount of benefit will vary for each individual but at least it is some type of relief for those workers losing income. While this is an option, let’s hope the effects of the algae bloom don’t last long enough to make this a viable option.

What is the State Doing?

The good news is that Florida legislators are looking at the economic impacts on businesses.  Senator Bill Nelson has filed a bill that could provide tax breaks to businesses affected by the algae bloom issue. Some say that the effort isn’t enough, others are just glad something is being offered this time. On that front, all we can do is see if the bill is approved.

The Florida Department of Economic Opportunity (DEO) is on it as well. DEO activated their assessment survey. They want businesses to report damage resulting from the algae blooms. DEO will use this to create a relief strategy for those businesses.  Business owners can take the survey here.  As the situation worsens, the state may re-enact their Small Business Emergency Bridge Loan program.  It would provide small businesses funds to bridge the financial gap while recovering from a loss.

In the meantime, business owners who may be affected need to document business activities, especially any occurrences that could show a loss of business.  Make sure your financial records are up to date. Keep employees posted so they can plan accordingly. And stay out of the water!