Business Interruption
What Is Business Interruption Insurance?
Business interruption insurance is a business insurance coverage designed to protect your business in case you’re forced to shut down for a period of time due to disaster. It’s also called business income insurance, business income coverage, or business income and extra expense insurance.
You may have business interruption insurance as a standalone policy or as part of a packaged policy, such as a business owner’s policy or multiple peril policy.
What Does Business Interruption Insurance Cover?
Business interruption insurance typically helps you cover lost business income due to a covered event such as a natural disaster, fire, hurricane, theft, or other disruptive events. Most business interruption policies offer coverage for a specified length of time (also known as the restoration period).
Business interruption insurance covers business losses such as:
- Lost income/Lost profits: This is the money your business could have earned without the interruption (up to your coverage limit).
- Operating Expenses: Expenses such as rent, mortgage, lease payments, utilities, and other fixed costs can be included. Some policies also cover relocation costs, training costs, and other expenses you incur to continue operating.
- Payroll/Income Coverage: Business interruption coverage should cover employee wages or salaries to help you retain employees while not doing business.
- Taxes: If taxes come due while you’re out of operation, your insurance policy may cover some costs.
- Debt Repayment/Loan Payments: If you are repaying a loan, business interruption coverage could help you stay on top of payments while not earning revenue.
- Dependent Properties: If damage to another business directly impacts your business, you can be compensated for the damage. This is also referred to as contingent business interruption insurance.
If your business is in an area that is at higher risk of natural disasters, communicable diseases, or fires, consider contacting your insurance company about this coverage (or speak to one of our specialists).
