Business interruption insurance helps replace lost income when your business cannot operate due to covered perils. This coverage has become increasingly important as businesses face more frequent disruptions.
How Business Interruption Works
This coverage typically includes:
- Lost revenue replacement
- Continuing operating expenses
- Extra expenses to resume operations
- Extended period of indemnity
What Triggers Coverage
Business interruption typically requires:
- Physical damage to covered property
- Damage from a covered peril
- Suspension of business operations
- Direct causal relationship
Pandemic Considerations
The COVID-19 pandemic highlighted important coverage limitations:
- Most policies exclude virus-related closures
- Government-ordered shutdowns often not covered
- New pandemic coverage options emerging
- Importance of carefully reading policy language
Calculating Coverage Needs
Determine appropriate limits by analyzing:
- Monthly gross earnings
- Seasonal business fluctuations
- Time needed to resume operations
- Potential growth during the policy period