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Business Interruption Insurance Guide
Business interruption insurance replaces lost income and covers ongoing expenses when your business can't operate due to a covered event like fire, storm damage, or other physical property damage.
Why It Matters Beyond Property Coverage
Property insurance repairs physical damage, but doesn't replace the income you lose while rebuilding — business interruption coverage fills this gap, often the difference between recovering and closing permanently.
Typical Costs
| Business Size | Typical Annual Cost |
|---|---|
| Small business | $500-$3,000 (often bundled into a BOP) |
What's Typically Covered
Lost revenue, ongoing fixed expenses (rent, payroll), and sometimes temporary relocation costs — all tied to a covered physical damage event, not general business slowdowns.
Important Limitations
Business interruption coverage typically requires actual physical damage to trigger — it generally doesn't cover income loss from events like a pandemic-driven closure without physical property damage, a distinction worth understanding clearly.
Bundling for Savings
Business interruption is often included as part of a BOP alongside property and general liability coverage, which is typically cheaper than purchasing standalone.
How Much Coverage to Get
Calculate your typical monthly revenue and fixed expenses, then estimate a realistic recovery timeline for your industry to determine an appropriate coverage period and limit.
Common Mistakes
Assuming business interruption covers any revenue loss, when it typically requires a specific triggering event like physical property damage — always review your policy's specific triggers.
Frequently Asked Questions
Typically no — most policies require physical property damage to trigger coverage, which generally excludes closures without direct physical damage. Review your specific policy language carefully.
Often yes — the cost is relatively modest, especially bundled into a BOP, while the protection against a potentially business-ending event (like a fire) can be significant.