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What Is Business Interruption Insurance?


Your business can’t stay profitable without a steady stream of revenue. When a disaster forces you to temporarily close your doors, the lost income can quickly put your company’s finances in the red. Business interruption insurance (also called business income coverage) adds an important layer of protection against many common causes of disruption.

How Does Business Interruption Insurance Work?

Business interruption coverage is purchased as part of a commercial property insurance policy or business owner’s policy and helps to protect you if your business experiences disruption due to a covered peril. Covered causes of loss typically include theft, fire or wind. So you know which perils your insurer covers, be sure to review your coverage options with your agent.

The payout can be used to replace lost income and cover operating expenses. According to the Insurance Information Institute, it can take businesses more time than expected to return to business as usual after a disaster, so it’s important to have business interruption limits that are high enough to cover extended periods of interruption. Most policies have a “period of restoration” which is the length of time that your policy will help pay for lost income and expenses while you restore your business. Policies typically limit the period to 30 consecutive days, but it’s possible to get an endorsement that extends the period of time.

What About Business Interruption Caused by Cyberattacks?

Ransomware and other types of cyberattacks have become a common cause of business interruption. According to the 2021 Internet Crime Report from the Internet Crime Complaint Center (IC3), there was an unprecedented surge in cyberattacks in 2021. The IC3 received 3,729 ransomware complaints, with losses of more than $49.2 million. These attacks have also become more sophisticated.

A cyberattack can make computers – including cash registers and other essential systems – unusable, forcing businesses to pause operations until the problem is fixed.

Business interruption losses tied to cyberattacks may be excluded from a business interruption insurance coverage that’s linked to a commercial property insurance policy. However, coverage is available through cyber liability insurance.

Do You Have the Business Interruption Coverage You Need?

Don’t wait until a disaster forces you to close your doors. Check your business interruption coverage now. If you already have coverage, verify that the limits are high enough. Also check the policy for any exclusions and determine whether additional endorsements are needed.

Do you need help securing the right business interruption coverage for your business? An independent agent can help you review your coverage needs and find a policy that’s the right fit for you. Find an agent.