What Exactly Is Business Interruption Insurance?

Without the proper business insurance, managing a company can be challenging. Business interruption insurance, also called business income insurance and contingent business interruption coverage, is a policy most business owners need. It can help replace lost income if your business is temporarily closed due to a covered loss, such as property damage.

For instance, if a tree falls on your business roof and you are forced to close for repairs, this policy can help pay the costs of your lost income while they restore your property. Your business income insurance may also cover civil authorities, such as a government-mandated road closure that temporarily closes your firm.

Notably, a Business Owner's Policy (BOP) combines business interruption insurance with coverages such as:

• Business property insurance
• Standard liability coverage

And if your firm needs additional protection, you can acquire additional types of insurance, such as data breach insurance.

What is Covered By Business Interruption Insurance?

If a covered loss requires the closure of your firm, interruption insurance can help cover operating expenditures such as:

• You would ordinarily get revenue if your firm were open.
• Mortgage, rent, and lease payments for the space in which your organization operates.
• Loan payments must be made throughout this period.
• Taxes, whether paid on a monthly or quarterly basis.
• Payroll for your staff.
• Relocation expenses are covered if physical damage forces you to move to a new or temporary location.
• Expenses incurred if, for instance, you need to rent a temporary location to continue operating your firm following a covered loss.
• After a covered loss, employees' training expenses to learn how to operate new machinery or equipment are compensated.

Restoration Time for Business Interruption Coverage

The restoration period of your business interruption coverage is the time your policy will assist with lost income. In most circumstances, there is a 48- to 72-hour waiting time before income coverage is activated. Check your policy to learn when your restoration time begins and finishes.