Business income insurance may also be referred to as business interruption insurance because it provides coverage for lost income that results post-disaster. When a business suffers a covered loss, it can take weeks or months to recover and repair the necessary infrastructure or materials in order to get things back up and running. If the business is forced to rebuild or shut down the company during this period, a business income insurance policy can provide financial assistance.

This policy is usually added to a business property insurance policy or a comprehensive business owner policy. The provisions inside these kinds of additions will pay out if the cause of the loss or damage is covered by the overarching policy, allowing a business to be in the same kind of financial situation it would have been without the loss.

There are typically five components covered under these policies, such as extra expenses, profits, fixed costs, temporary location, and civil authority egress/ingress. Extra expenses can cover reasonable expenses outside of fixed costs that allow the company to continue operating while the damaged property is being repaired. Profit protection is based on what would have been earned if the company had not sustained the loss or damage. Fixed costs refers to operating expenses that are still incurred by the property.

Certain policies may also cover temporary location, giving financial assistance for the extra expenses associated with moving to or operating from a temporary location while the damage is repaired. Finally, civil authority egress/ingress is directly related to a government-mandated closure of the business the leads to lost revenue, like those associated with street closures for a covered event.

The coverage on such a policy will usually extend until the end of the “business interruption period” outlined in the policy. Usually, this refers to a start date of the incident of the covered peril and ends when the damaged property has been repaired, allowing business operations to resume at the same level they were before the loss.

A sudden loss for a business owner can be devastating if he or she is without loss of business income insurance. Many companies with significant losses and no coverage would struggle to meet payroll or even keep their doors open, and this is why it’s so important to have this valuable coverage for your company. Protect yourself against a worst case scenario with a business income insurance policy.