What is Business Interruption Insurance?
Business interruption insurance is a unique type of insurance. If a covered incident causes a business’ profits to diminish, a policy will help make up for the decrease. It will provide payment for the difference in income, according to the policy’s terms, conditions and limits.
Since business interruption policies provide payments for lost income, this type of insurance is sometimes called business income coverage.
What Kinds of Incidents Does Business Income Coverage Cover?
Generally speaking, business income coverage covers the same kinds of incidents as a building policy. Specific coverages vary, but many policies protect against incidents like fire, theft, windstorms, and similar perils.
One thing business interruption policies don’t usually cover is poor business decisions. If a business owner makes a strategic mistake that leads to decreased sales, a policy won’t help make up the different. This type of insurance is meant to protect against what businesses can’t control, and not what they can.