Waiting period
Also called Time deductible or waiting period deductible
Definition
A 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.
Some coverages don’t measure your share of a loss in dollars. They measure it in time. A waiting period is the number of hours or days after a covered loss during which the policy doesn’t pay, so your business absorbs that stretch itself. That’s why it’s sometimes called a time deductible.
In business income coverage
Business income insurance commonly has a waiting period after covered property damage, often 72 hours. Income you lose during that time generally isn’t covered. Once it passes, the period of restoration begins, and the policy can help replace lost income and continuing expenses like rent and payroll, up to its limit. Extra expense coverage often applies without a waiting period.
Some policies let you choose a shorter waiting period, which typically raises the premium, or a longer one, which typically lowers it. A short closure, like a storm that blocks your street for a day or two, may fall entirely within the waiting period.
In cyber insurance and workers’ comp
Cyber insurance often applies a waiting period, measured in hours, before business interruption coverage starts after a system outage, such as a ransomware attack.
In workers’ comp, the term means something different: the days an injured employee must be out of work before lost-wage benefits begin. Whether there’s one, how long it is and whether those days are paid later depend on your state’s rules. You can find your state’s agency through the U.S. Department of Labor’s list of state workers’ compensation officials.