What Is Business Interruption Insurance?

12/15/2019 (Permalink)

Combining business interruption insurance with property insurance may help rebuild your business and restore it to full operations.

The basic purpose of business insurance is to rebuild and restore your business to the same financial position it was in before a covered peril caused a loss. Business interruption insurance is a coverage that can be purchased as part of a business owner’s policy, a standalone policy or added to a property insurance policy to cover loss of business income that results from a closed business due to a covered peril.

Types of Covered Losses

An insurance professional in Douglas, MN can review your policy with you to determine your exact coverages. Covered losses typically include:


Estimated lost profits based on profits earned in previous months
Costs still being incurred by the business while operations are shut down
Cost to rent and relocate to a temporary location while repairs are being made
Cost of training employees to operate new machinery that has replaced damaged machinery
Reimbursement of reasonable expenses to continue operations while repairs are being made
Loss of revenue caused by government ingress or egress


How Long Coverage Lasts

Your policy will define the period coverage applies. Coverage typically begins on the date a covered cause of loss resulted in interruption of your business operations and ends on the date that your business operations have been restored to the state they were in before the covered cause of loss.

How Coverage Differs From Property Insurance

Property insurance covers the cost to rebuild or replace your physical property, such as the building your business operates out of, equipment and supplies. It may also cover other property-related expenses, such as the cost of storm cleanup. Business interruption coverage covers the profits your business would have made, had your business operations not been interrupted due to a covered cause of loss.

Your business relies both on the physical property used in operations and on the profits generated using that property.