Business interruption insurance, or commonly known as business income insurance, is a type of insurance coverage that provides financial protection to a business in the event of a temporary shutdown or disruption of their operations. The goal is to compensate businesses for the income lost and expenses incurred during the period of interruption caused by covered losses.
Business interruptions can occur due to various reasons, such as natural disasters, fires, floods, vandalism, or even government-mandated closures. These disruptions can lead to a loss of revenue.
Business interruption insurance helps to mitigate these financial losses by providing coverage for:
- Loan payments that are due during the shutdown.
- Mortgage, rent, and lease payments.
- Payroll for your employees.
- Taxes, whether you pay them quarterly or monthly.
- The revenue you’d make if your business was open.
It is important to know that business income insurance is usually sold and purchased as an endorsement to a commercial property insurance policy or a commercial package insurance policy. This coverage plays a crucial role in helping businesses recover and maintain financial stability during a challenging time of interruption.