Business Income Insurance (or Business Interruption insurance) helps your small business recover from a temporary shutdown when:
- Your business has commercial property insurance through a standalone policy or a business owner's policy.
- The property insurance policy covers the cause of the interruption. Property insurance usually covers fires, theft, vandalism and extreme weather.
- Your business shuts down completely. If you’re still operating and bringing in revenue in any capacity (even online or out of your home), you won’t be able to collect business interruption benefits.
This type of coverage is usually included in a business owner’s policy (BOP) but can be a standalone policy in some jurisdictions.
Do you Need Business Income Insurance?
Damage caused by fires, storms and other incidents can lead to financial loss and, in some cases, permanent closure. Business interruption insurance keeps your business afloat until you can reopen with coverage for:
- Profits that would have been earned (based on prior months' financial statements).
- Operating expenses and other fixed costs still being incurred by the property (based on historical costs).
- Some policies cover the extra expenses for moving to, and operating from, a temporary location.
- Reimbursement for reasonable expenses (beyond the fixed costs) that allow the business to continue operation while the property is being repaired.
- Civil authority ingress / egress. Government-mandated closure of business premises that directly causes loss of revenue. Examples include forced business closures because of government-issued curfews or street closures related to a covered event.
Want to learn more? Contact our small business risk experts.