Business Interruption
Coverage for lost income and continuing operating expenses when a covered peril suspends business operations.
Business Interruption (BI) insurance indemnifies a business for lost net income and necessary continuing expenses when physical damage from a covered cause of loss forces a suspension of operations. It is usually tied to damage to insured premises under the same policy.
Key concepts include the period of restoration (time to rebuild with reasonable speed), waiting periods, and optional extensions for utility failure or civil authority. Extra Expense coverage pays costs to mitigate the loss, such as temporary relocation.
BI claims require detailed financial records to establish the baseline business and project what would have been earned but for the loss.
Examples
A restaurant burns; BI pays lost profit and payroll for staff the owner keeps on during a six-month rebuild, subject to policy limits and the period of restoration.
Common Misconceptions
Businesses often underestimate the documentation needed — tax returns, P&L statements, and pre-loss trends are critical. Confusing BI with contingent business interruption (loss at a supplier's location) leads to uncovered expectations unless that endorsement exists.
Related Terms
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Back to Glossary Claims Pages AcademyThis definition is provided for informational and educational purposes. Insurance terminology may vary by jurisdiction, policy, and context. Consult a licensed professional for guidance specific to your situation.
