Business Interruption Insurance
Definition. Business Interruption Insurance (also called Business Income Insurance) covers lost net income and continuing expenses when a covered property loss forces a business to suspend or reduce operations.
Also known as: Business Income, BI Coverage, Loss of Income Insurance
Triggered by a covered cause of loss on the Commercial Property policy (fire, theft, windstorm, etc.). Pays the income the business would have earned plus normal operating expenses (rent, payroll) for a period of restoration — typically up to 12 months. Most policies also include Extra Expense coverage for costs above-and-beyond normal to expedite reopening.
Not the same as standalone Business Income Insurance contracts — Business Interruption is the common-trade name; Business Income is the formal policy term used in the ISO Commercial Property form.
Example
A bakery's commercial kitchen is destroyed by fire. Repairs take 5 months. Business Interruption pays the bakery's lost net income for those 5 months plus ongoing rent and base payroll — even though no bread is being sold.
Sources cited
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Reviewed by California-licensed Property & Casualty insurance agent
Jason Wootton (CA License #0I94454). Not insurance advice, an individual recommendation, or a solicitation in any state. Insurance regulations vary by state. For specific coverage decisions, consult a licensed insurance agent in your state.
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