Business Interruption Coverage
Business interruption coverage, sometimes known as business income insurance can help replace the income you lose if you can’t open temporarily after a covered loss. Your business interruption insurance may also cover a civil authority, like a government-mandated road closure that temporarily shuts down your company.
If a covered loss forces your business to shut down, your interruption insurance can help cover your operating expenses, like:
- Revenue you’d normally make if your business was open.
- Mortgage, rent, and lease payments for the space your business operates from.
- Loan payments that you need to make during that time.
- Taxes, whether you pay them monthly or quarterly.
- Payroll for your employees.
- Relocation costs if you have to move to a new or temporary location because of physical damages.
- Extra expenses if, for example, you need to rent another space to temporarily run your business
- Training costs for employees to learn how to use new machinery or equipment
Business Interruption Coverage Restoration Period
The restoration period of your business interruption coverage is the length of time where your policy will help pay for lost income. In most cases, there’s a 48 to 72 hour waiting period before your policy kicks in with income coverage.
Business Interruption Insurance Exclusions
Business interruption insurance doesn’t cover:
- Broken items resulting from a covered event or loss.
- Flood or earthquake damage, which you’ll need a separate policy for.
- Undocumented income that’s not listed on your business’s financial records.
- Utilities, because they’re usually turned off when your business closes due to damage.
- Communicable diseases that cause a shutdown in your operation.
How Much Does Business Interruption Insurance Cost?
The cost of your business interruption coverage may depend on a number of factors, including your industry, number of employees, and/or amount of coverage.
Costs can also vary depending on your location and your risk of a covered peril or loss. If your business is in an area with a higher risk of wildfires, your cost of business interruption insurance may be higher. If your business is in an area with an increased risk of natural disasters like hurricanes, you may have to pay more for your coverage than businesses located inland.
