Business interruption

How it works

Business interruption is the everyday name for what most policies call business income coverage. Corgi sells it as business income insurance. When it applies, it typically helps pay for:

• the net income you would have earned while you’re closed or slowed down
• expenses that keep coming, like rent, payroll and loan payments
• often, extra expenseExtra expenseExtra expense coverage helps pay the reasonable added costs of staying open or reopening sooner after covered property damage, such as renting a temporary space.Read the definition to reopen sooner, such as moving to a temporary space

It’s usually triggered only by covered physical damage, like a fire, burst pipe or storm that your property policy covers. If the cause of damage is excluded from your property policy, the income you lose to it generally isn’t covered either. Coverage typically starts after a waiting periodWaiting periodA waiting period is the stretch of time after a covered loss before coverage, such as business income, starts paying, working like a deductible measured in hours or days.Read the definition and lasts through the period of restorationPeriod of restorationThe period of restoration is the time business income coverage pays for after covered damage, from the end of the waiting period until your property should reasonably be repaired.Read the definition, the time it should reasonably take to repair, up to your policy’s limit.

What it doesn’t cover

Business interruption isn’t protection against a bad quarter. A slow season, a lost customer or a closure with no covered physical damage usually isn’t covered. Most policies also exclude closures caused by viruses or disease. As with any policy, what’s paid depends on the terms, limits and exclusions.

Why it matters for a small business

Rent, loan payments and payroll don’t pause because your doors are closed, and a few weeks without sales can be hard to absorb. Because claims are calculated from your records, keep tax returns, profit-and-loss statements and sales reports somewhere you could get to after a fire. The guide to how business income claims are calculated explains the math.