What Is Business Interruption Insurance?

By Iris Turner, Commercial Lines Agent

We get a lot of questions about business interruption insurance – specifically what it is, who it’s for, and how much it costs.

Business interruption insurance is usually included in your business insurance/property insurance – it’s rarely sold as a standalone product.

Business interruption insurance covers a loss of income due to circumstances beyond your control, like a fire or natural disaster that disrupts your business operations. It also covers things like cyberattacks. This coverage is designed to help businesses cover expenses like payroll, rent, and other costs that may continue even if the business is unable to generate revenue during the interruption period.

This coverage can help cover other expenses that you incur as a result of the interruption, like the cost of renting temporary space, purchasing new equipment, or paying for additional advertising.

In order for business interruption insurance to be triggered, the business interruption must be caused by a covered event. It is important to carefully review your policy to understand what events are covered and what events are excluded. For example, closings due to COVID were not generally covered by business interruption insurance.

Most business interruption insurance policies include a waiting period. That’s the amount of time that must pass before the coverage kicks in. This waiting period is typically between 24 and 72 hours, but can be longer depending on the policy.

Business interruption policies typically have a coverage limit, which is the maximum amount that the policy will pay out for a covered interruption. It is important to carefully review your policy to understand the coverage limit and ensure that it is sufficient for your needs.

This can be done by estimating the amount of revenue that you would lose during the interruption period, as well as any extra expenses that you would incur. It’s also important to consider factors such as payroll and rent, which may continue even if your business is unable to generate revenue.

Be sure to carefully review your policy and understand the coverage options, qualifying events, waiting periods, coverage limits, and how to calculate coverage. By having the right business interruption insurance in place, you can help protect your business from unexpected disruptions and keep your operations running smoothly.

If you have any questions about business interruption insurance – or any other type of insurance – please reach out. We’d love to help.