Understanding the Risks in Business Interruption

Business Interruption Insurance is designed to protect businesses from the loss of income that may occur after a catastrophic event. This type of coverage is crucial for helping a business recover from a temporary closure or slowdown by covering ongoing expenses and lost profits.

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What is Typically Covered:

• Lost Income: Compensation for the revenue your business would have earned during the period it is out of operation due to a covered loss.

• Operating Expenses: Coverage for fixed costs that continue even when business operations are temporarily halted, such as rent and utilities.

• Relocation Costs: If your business needs to move to a temporary location while the primary premises are being repaired, these expenses may be covered.

• Employee Wages: Ensures that you can pay your employees and retain staff while your business is not operational.

• Loan Payments: Coverage for any business loan payments that are due while your business is not generating its normal income.

• Taxes: Provides for the payment of taxes that come due while your business is interrupted.

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What is Not Typically Covered:

• Closure Due to Pandemic: Many policies exclude losses due to pandemics or infectious diseases unless specifically endorsed.

• Undocumented Income: Income that cannot be verified through financial records is typically not covered.

• Partial Closures: Some policies may not cover losses unless the business is completely shut down.

• Utility Failure: If the interruption is due to a failure of utility service outside of your property, it may not be covered unless specifically endorsed.

• Flood or Earthquake Damage: These events often require separate policies for coverage.

• Interruptions Due to Strikes or Labor Disputes: These are typically excluded from standard coverage.