Business Interruption
What is Business Interruption?
Business interruption insurance is insurance coverage that replaces business income lost in a disaster. The event could be, for example, a fire or a natural disaster. Business interruption insurance is not sold as a separate policy but is either added to a property/casualty policy or included in a comprehensive package policy as an add-on or rider.
What does a Business Interruption policy cover?
Profits
Based on prior months' performance, a policy will provide reimbursement for profits that would have been earned had the event not occurred.
Fixed Costs
These can include operating expenses and other incurred costs of doing business.
Temporary Location
Some policies cover the costs involved with moving to and operating from a temporary business location.
Extra Expenses
Business interruption insurance will provide reimbursement for reasonable expenses (beyond the fixed costs) that allow the business to continue operating while the business gets back on solid footing.
Civil authority ingress/egress
A business interruption event may result in government-mandated closure of business premises that directly cause financial loss. Examples include forced closures because of government-issued curfews or street closures related to a covered event.
Employee wages
Coverage of wages is essential if a business does not want to lose employees while shutting down. This coverage can help a business owner make payroll when they cannot operate.
Taxes
Businesses are still required to pay taxes, even when disaster hits. Tax coverage will ensure a business can pay taxes on time and avoid penalties.
Loan Payments
Loan payments are often due monthly. Business Interruption coverage can help a business make those payments even when they are not generating income.
What is not covered by a Business Interruption policy?
× Broken items resulting from a covered event or loss (such as glass)
× Flood or earthquake damage, which are covered by a separate policy
× Undocumented income that’s not listed on your business’ financial records
× Utilities
× Pandemics, viruses, or communicable diseases (such as COVID-19)