Coverage Type

Business Interruption Insurance

Keep your business financially whole when disaster forces you to close.

Also called business income coverage, this protection replaces lost income and pays ongoing expenses when a covered property loss—like fire, storm damage, or theft—forces your business to temporarily shut down.

Property insurance covers rebuilding your physical space. Business interruption covers the income you lose while that rebuilding happens. Without it, many businesses couldn't survive a months-long closure.

Get a Business Interruption Quote

Usually bundled with commercial property—let's review your coverage

Key Requirement: Covered Property Loss

Business interruption coverage only triggers when there's a covered loss under your property insurance. If your property policy doesn't cover floods, a flood that closes your business won't trigger business interruption coverage. This is why proper property coverage is essential—it's the foundation that business interruption builds upon.

What Business Interruption Covers

Lost Business Income

Replaces the net income your business would have earned during the shutdown period. This is calculated based on your historical financial records and projected earnings, ensuring you can maintain profitability even while closed.

Ongoing Operating Expenses

Covers fixed costs that continue even when you're not operating—rent or mortgage payments, loan payments, taxes, and insurance premiums. These bills don't stop just because your doors are closed.

Employee Payroll

Helps you continue paying employees during the closure so you don't lose your trained workforce. Keeping key employees on payroll means you can reopen faster and maintain business continuity.

Temporary Relocation Costs

If you can operate from a temporary location, coverage helps pay for the additional rent, moving costs, and setup expenses to get you back in business quickly while repairs are made.

Extra Expense Coverage

Pays for reasonable costs above your normal operating expenses to minimize the shutdown period. This might include expedited shipping for equipment, overtime for contractors, or premium rates to speed repairs.

Understanding the Period of Restoration

This critical concept determines how long your coverage lasts after a loss:

What Is the Period of Restoration?

This is the timeframe during which business interruption coverage applies. It begins when the covered loss occurs and ends when your property should reasonably be repaired, rebuilt, or replaced—even if you choose to take longer.

Extended Period of Indemnity

Some policies offer extended coverage beyond physical repairs. This recognizes that customers don't instantly return when you reopen. Extended periods of 30, 60, or 90 days help bridge the gap back to normal revenue.

Waiting Period

Most policies have a waiting period (typically 48-72 hours) before coverage begins. Short closures of a day or two usually aren't covered. This works like a time-based deductible.

What's NOT Covered

Understanding exclusions helps set realistic expectations:

Losses from non-covered property perils (if flood isn't covered on your property policy, flood damage won't trigger business interruption)

Pandemic or virus-related closures (typically excluded after COVID-19)

Government-ordered shutdowns not related to property damage

Utility outages that don't physically damage your property

Losses due to undocumented income (cash businesses may have difficulty proving losses)

Closures due to your own negligence or failure to maintain property

Damage to property you don't own or lease (supplier or customer issues)

Losses exceeding your policy limits or beyond the coverage period

Important Note on Pandemics: Following COVID-19, most business interruption policies explicitly exclude virus and pandemic-related closures. If pandemic protection is important to your business, discuss specialized coverage options with us—though availability is limited.

Real Claims Examples

See how business interruption coverage responds in real-world scenarios:

Fire Closes Restaurant for 3 Months

Scenario: A kitchen fire causes extensive damage to a restaurant. The business must close completely for 3 months while repairs are made, then takes another month to rebuild customer traffic.

Coverage: Business interruption covers $45,000 in lost net income, continues paying $12,000/month in rent, covers $30,000 in employee wages to retain staff, and $5,000 in extra expenses for expedited equipment delivery. Total payout: approximately $100,000.

Water Damage to Retail Store

Scenario: A burst pipe floods a retail store, damaging inventory and requiring 6 weeks of repairs. The store must close during their busy holiday season.

Coverage: Coverage replaces $60,000 in lost holiday revenue, pays $8,000 in continuing rent and utilities, and covers $3,000 to set up a temporary pop-up location to serve loyal customers.

Storm Damages Manufacturing Facility

Scenario: A severe windstorm damages the roof of a manufacturing facility. Equipment is damaged and production stops for 8 weeks.

Coverage: Business interruption pays $200,000 in lost production revenue, covers $40,000 in ongoing lease payments and loan obligations, and pays $15,000 in extra expenses to expedite roof repairs and equipment replacement.

Neighboring Business Fire

Scenario: A fire in an adjacent building doesn't damage your property, but authorities block access to your business for 2 weeks while they investigate and ensure structural safety.

Coverage: With civil authority coverage (often included), you're covered for lost income during the access restriction period, typically up to 30 days.

How Coverage Limits Are Calculated

Choosing the right coverage amount requires careful analysis of your business finances:

Annual Revenue

Your coverage limit should reflect your expected gross earnings for the maximum likely restoration period

Profit Margins

Higher-margin businesses may need higher limits relative to revenue; the policy covers net income, not gross sales

Fixed Costs

Add up all expenses that continue during closure—rent, loans, insurance, key salaries—to ensure adequate limits

Restoration Time

Consider realistic rebuild times. A custom-built facility takes longer than a standard retail space

Seasonal Factors

If a loss during peak season would be catastrophic, ensure limits account for maximum seasonal revenue

Coinsurance Requirements

Many policies require you to insure 80-100% of annual business income or face penalties at claim time

Worksheet Approach: Add your monthly fixed expenses (rent, loans, insurance, utilities, key salaries) and multiply by your maximum expected restoration period (often 6-12 months). Then add your expected net profit for that period. This gives you a baseline for coverage limits. We can help you work through this calculation.