What is Business Interruption Insurance?

Understanding Business Interruption Insurance Coverage

Business Interruption Insurance is a commercial insurance coverage designed to protect businesses from financial losses when normal operations are disrupted due to a covered event, such as a fire, hurricane, or other insured disaster.

What Does It Cover?

This insurance usually covers:

  • Lost revenue due to closure
  • Fixed operating costs, like rent and utilities
  • Employee wages to retain staff during downtime
  • Loan payments are still due during closure
  • Relocation costs if you need to move temporarily
  • Training expenses if new equipment requires staff retraining

Coverage begins after a waiting period, usually 48 to 72 hours after the triggering event.

Is Business Interruption Insurance Included in All Policies?

No. It’s often an add-on or rider to a commercial property policy or part of a business owner’s policy (BOP). Always review your specific policy details or consult an insurance professional.

Covered Events That Trigger a Business Interruption Claim

Your business must suffer direct physical damage from a covered peril to activate this insurance. Common covered events include:

  • Fire
  • Storm damage
  • Vandalism
  • Burst pipes
  • Theft
  • Hurricanes (if not excluded)

Pandemics and floods are typically excluded, unless you purchase special endorsements.

Business Interruption vs. Property Insurance

Property insurance covers physical loss or damage to buildings and equipment, while business interruption insurance covers the financial losses that result from being unable to use those assets.

You need both to protect your business entirely.

Do I Need Business Income Coverage?

If you can’t operate and don’t have income coming into your business, how long could you pay for ongoing expenses? Business income coverage can give you peace of mind if the unexpected happens. Learn more about this insurance and how it could help you survive after a fire, storm or theft.

This coverage is essential for:

  • Retail stores that rely on daily sales
  • Restaurants and bars that operate on tight margins
  • Medical offices with ongoing appointments
  • Warehouses and manufacturers with long production cycles
  • Hotels and vacation rentals depending on seasonal income

Any business that would struggle without revenue for weeks should have this protection.