Business Income vs. Business Interruption Insurance

What's the Difference Between Business Interruption and Business Income Insurance?

Business interruption and business income insurance are the same thing. They refer to the same coverage, which helps replace your business' lost income if you can't operate due to a covered property loss."
Updated: 10/11/2024
Read Time: 2 minutes
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Key Takeaways

  • This coverage can help while you're recovering from a loss that damaged your business' property and caused a temporary pause in operations.
  •  Business income insurance can help you pay for ongoing expenses, such as payroll, loan bills and mortgage or rent payments.
  • Business income insurance is included in a Business Owner's Policy (BOP).
Insurance companies often use “business income insurance,” “business interruption insurance” and “extra expense coverage” interchangeably. Both names can be abbreviated to BI insurance. If you come across any of these terms, just remember it refers to the same coverage.
 
Business income insurance is an essential type of coverage for small business owners to have. If you can’t operate because of covered property damage, this insurance can help replace lost income, which you can use to help pay for necessary business expenses. This includes:
 
  • Payroll
  • Rent
  • Mortgage payments
  • Loans

What Does BI Insurance Cover?

BI insurance helps replace your business’ lost income if you can’t operate because of a covered property loss, such as:
 
  • Fire
  • Theft
  • Wind
It’s important to remember that business income insurance doesn’t cover every cause of property damage. For example, if you can’t operate because of flood damage or broken items, business income insurance can’t help you.
Tip:
Business income insurance is included in a Business Owner’s Policy (BOP) in addition to general liability insurance and commercial property insurance.

Do I Need Business Income Coverage?

If you can’t operate and don’t have income coming into your business, how long could you pay for ongoing expenses? Business income coverage can give you peace of mind if the unexpected happens. Learn more about this insurance and how it could help you survive after a fire, storm or theft.
Business Income Coverage
Business Income and Extra Expense Coverage
Learn how business income and extra expense insurance coverage could help your business survive after a fire, storm, theft or cloud service interruption in this video.

Frequently Asked Questions About Business Income vs. Business Interruption

Loss of income is the same type of protection as business income insurance or business interruption insurance. It can help replace lost income if your small business can’t open temporarily after a covered loss, like property damage.
Small business owners can follow these simple steps to calculate your business income for insurance:
 
  1. Calculate your total revenue. This includes all items and services you sell.
  2. Subtract your business’ expenses, cost of goods sold and operating costs from your total revenue. This calculates your business’ earnings before tax.
  3. Deduct taxes from this amount to find your business’ net income. Your net income will be your business’ income.
The equation for business income is:
 
Business Income = Revenue - Expenses
There’s not a simple, one-size-fits-all answer for how much BI coverage you need. That’s because every small business is unique. If your business interruption costs exceed the coverage limit you choose for your policy, you’ll have to pay out of pocket for the extra expenses. A good rule of thumb is to use your gross earnings and projections to estimate your future profits.

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Additional disclosures below.
The Hartford shall not be liable for any damages in connection with the use of any information provided on this page. Please consult with your insurance agent/broker or insurance company to determine specific coverage needs as this information is intended to be educational in nature.
 
The information contained on this page should not be construed as specific legal, HR, financial, or insurance advice and is not a guarantee of coverage. In the event of a loss or claim, coverage determinations will be subject to the policy language, and any potential claim payment will be determined following a claim investigation.
 
Certain coverages vary by state and may not be available to all businesses. All Hartford coverages and services described on this page may be offered by one or more of the property and casualty insurance company subsidiaries of The Hartford Insurance Group, Inc. listed in the Legal Notice.
 
The Hartford Insurance Group, Inc., (NYSE: HIG) operates through its subsidiaries under the brand name, The Hartford, and is headquartered in Hartford, CT. For additional details, please read The Hartford’s Legal Notice.
 
* Customer reviews are collected and tabulated by The Hartford and not representative of all customers.
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