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Business Interruption Insurance

Updated 11:49 AM EST, Wed October 28, 2020

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What Is Business Interruption Insurance?

Running a company can be difficult without the right business insurance. One coverage most business owners need is business interruption insurance, also known as business income insurance and contingent business interruption coverage. It can help replace income you lose if you can’t open temporarily after a covered loss, like property damage.
 
For example, if a tree falls on your office roof and you need to shut down for repairs, this policy can help cover the costs of your lost income  while they restore it. Your business income insurance may also cover a civil authority, like a government-mandated road closure that temporarily shuts down your company.
 
It’s important to note that a Business Owner’s Policy (BOP) bundles business interruption insurance with coverages like:
 

What Does Business Interruption Insurance Cover?

If a covered loss forces your business to shut down, your interruption insurance can help cover your operating expenses, like:
 
  • Revenue you’d normally make if your business was open.
  • Mortgage, rent and lease payments for the space your business operates from.
  • Loan payments that you need to make during that time.
  • Taxes, whether you pay them monthly or quarterly.
  • Payroll for your employees.
  • Relocation costs if you have to move to a new or temporary location because of physical damages.
  • Extra expenses if, for example, you need to rent another space to temporarily run your business after a covered loss.
  • Training costs for employees to learn how to use new machinery or equipment after a covered loss.

Business Interruption Coverage Restoration Period

The restoration period of your business interruption coverage is the length of time where your policy will help pay for lost income. In most cases, there’s a 48 to 72 hour waiting period before your policy kicks in with income coverage. To see when your restoration period starts and ends, check your policy.
 

How Much Business Interruption Insurance Coverage Do I Need?

Every business interruption insurance policy will have a coverage limit. This is the amount of coverage you choose to have if you suffer a loss. It can be hard to figure out how much business interruption insurance you need. A good rule of thumb is to use your gross earnings and projections to estimate future profits and determine the right amount of coverage. Remember, if your business interruption costs exceed the coverage limit you choose, you’ll have to pay out of pocket for the extra expenses.
 
Some questions you can ask yourself to help determine how much coverage you need are:
 
  • How long would it take your company to recover after a physical loss or damage?
  • Does your business’ building have fire alarms and sprinklers that are up-to-date?
  • If you suffered a covered loss, do you think you could find another location in your area to rent as a temporary spot to do business?

How Much Does Business Interruption Insurance Cost?

The cost of your business interruption or business income coverage may depend on a number of factors, including your:
 
  • Industry
  • Number of employees
  • Amount of coverage
Costs can also vary depending on your location and your risk of a covered peril or loss. For example, if your business is in an area with a higher risk of wildfires, your cost of business interruption insurance may increase. If your business is in an area with an increased risk of natural disasters, like hurricanes, you may have to pay more for your coverage than businesses located inland.
 

Business Interruption Insurance Exclusions

Business interruption insurance doesn’t cover:
 
  • Broken items resulting from a covered event or loss.
  • Flood or earthquake damage, which you’ll need a separate policy for.
  • Undocumented income that’s not listed on your business’ financial records. 
  • Utilities, because they’re usually turned off when your business closes due to damage.
  • Communicable diseases that cause a shutdown in your operation.

How to Get Business Interruption Coverage

If the unexpected happens, our business interruption coverage can help protect your company. In fact, we’ve been helping protect small businesses for years. To learn more, you can work with private insurance agents or our team of representatives. Get a business insurance quote today.

Get a Small Business Quote
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 Financial Services Group, Inc. In TX, this insurance is written by Sentinel Insurance Company, Ltd., Hartford Casualty Insurance Company, Hartford Lloyd’s Insurance Company, Property and Casualty Insurance Company of Hartford, Hartford Underwriters Insurance Company, Twin City Fire Insurance Company, Hartford Accident and Indemnity Company and Hartford Fire Insurance Company. In Arizona, New Hampshire, Washington and California, the insurance is underwritten by Hartford Accident and Indemnity Company, Hartford Casualty Insurance Company, Hartford Fire Insurance Company, Hartford Insurance Company of Illinois, Hartford Insurance Company of the Midwest, Hartford Lloyd’s Insurance Company, Hartford Underwriters Insurance Company, Maxum Casualty Insurance Company, Maxum Indemnity Company, Navigators Insurance Company, Navigators Specialty Insurance Company, Pacific Insurance Company, Property and Casualty Insurance Company of Hartford, Sentinel Insurance Company, Ltd., Trumbull Insurance Company and Twin City Fire Insurance Company. The Hartford® is The Hartford Financial Services Group, Inc. and its subsidiaries, including Hartford Fire Insurance Company.
 
The Hartford® is The Hartford Financial Services Group, Inc. and its property and casualty subsidiaries, including Hartford Fire Insurance Company. Its headquarters is in Hartford, CT.
 
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