Business Interruption Insurance

Business Interruption Insurance

Disasters often strike without warning, forcing you to temporarily close your business.

Protect your business with Business Interruption Insurance.

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Claims Examples

Coverage

Problem: Following a kitchen fire, you have to close your cafe during restoration and repairs.

Outcome: Your Business Interruption Insurance covers the income lost when you were closed, totalling $55,000.

Coverage

Problem: One of your suppliers suffers a fire, causing your shipments to be delayed and negatively impacts your income.

Outcome: Your Contingent Business Interruption policy covers the income lost during the time it for your supplier to recover, totalling $79,000.

Coverage

Problem: Your office was broken into and vandalized, forcing you to rent a temporary office space during repairs.

Outcome: Your Business Interruption Insurance covers the temporary rental costs, as well as utility fees, totalling $18,000.

Business Interruption Insurance, Explained.

What is Business Interruption Insurance?

Business Interruption Insurance provides coverage for net income lost following a covered property loss.  In addition to covering lost income, Business Interruption Insurance may also cover overhead costs required to keep your business operating, including rent and electricity, as well as employee payroll.

Business Interruption Insurance is not a standalone policy.  It is typically included in your commercial property insurance policy or may be added to your existing policy as a rider.

What does it cover?

Business Interruption Insurance typically includes coverage for net income lost due to an insured disaster, as well as operating costs. Most policies respond after 12 or 24 hours of consecutive business closure.

Some expenses that may be covered include:

  • Overhead operating costs, such as rent and electricity.
  • Mortgage, rent, and lease payments.
  • Moving to a temporary location.
  • Employee’s wages and payroll.
  • Internet and telephone connections.
  • Taxes and loan payments.

What does it not cover?

Business Interruption Insurance does not provide coverage for: 

  • Terrorism
  • Undocumented income (income that is no listed on your financial records)
  • Pandemics, viruses, or infectious diseases (e.g., COVID-19)
  • Flood, earthquake, or pollution damage. Note, your commercial property policy may cover these events. Please speak with your broker to confirm.

How much does it cost?

The cost of Business Interruption Insurance is primarily based on your revenue amount, with rates beginning at $100/year.

Business Interruption Insurance is typically included in a commercial property insurance policy or business owner’s policy (BOP) automatically or added to an existing policy. 

Who needs this coverage?

Business Interruption Insurance is recommended for all business owners as a form of protection against lost income due to an insured loss.

What is the indemnity period under business interruption?

The indemnity period refers to the length of time for which compensation is payable under a business interruption policy and is typically 12, 24, or 36 months. The indemnity period may be extended to provide additional coverage beyond the length of time it takes to restore your business (restoration period)

Frequently asked questions

How is a business interruption claim calculated?

Different types of Business Interruption coverage will determine how payout is calculated. Most policies cover reimbursement for profits your business would have earned based on the prior month’s performance, in addition to extra expenses beyond fixed costs. Employee wages, taxes, and loan payments may also be taken into account.

Does Business Interruption Insurance cover pandemic (e.g., COVID-19) related closures?

Standard business interruption insurance provides coverage for damages sustained due to direct physical loss or damage, such as a fire. Unfortunately, it will not cover income lost or barriers to trade and travel due to a pandemic, infectious disease, or government-mandated closure.

Can you get Business Interruption Insurance as a standalone policy?

Business Interruption Insurance is typically included in a commercial property insurance policy or business owner’s policy (BOP). You can add it to an existing policy as a rider.

Other business insurance coverage options to consider:

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