Business Interruption Insurance

Business interruption insurance, also referred to as business income insurance or “BI”, can make the difference between you staying in business or losing your business altogether. It helps by protecting you against lost income after a covered peril affects your business. Covered perils typically include theft, fire, wind, falling objects or lightning, depending on your specific policy.

When you lose business income due to damages from a covered peril which causes  a shutdown or slowdown of your operations, you may be eligible to receive payment from your insurance company for that loss of income.  There are, however, terms or “time limits” and limits to the amount of income you can receive.  Those time limits are defined as the date that the covered peril began until the date that the damaged property is physically repaired and returned to the same condition that existed prior to the disaster.

There may also be a waiting period of 48 to 72 hours before what is known as the “period of restoration kicks in. The standard property policy limits the business income restoration period to 30 days, but this period can be extended to 360 days by endorsement.  

Coverage may include:

  • Lost net income (based on financial records)
  • Mortgage, rent and lease payments
  • Operating expenses
  • Move to a temporary location if needed
  • Loan payments
  • Taxes
  • Employee payroll
  • Civil authority ingress/egress: A business interruption event may result in government-mandated closure of business premises that directly cause financial loss. Examples include forced closures because of government-issued curfews or street closures related to a covered event.

Although business insurance coverage may cover civil authority closures related to a covered loss , it does not cover loss of income due to pandemics, viruses or communicable diseases like Covid-19.  These items may also be excluded and some of them may or may not be able to be added with an endorsement with limitations.

  • Utilities
  • Flood or earthquake damage, which are covered by a separate policy
  • Undocumented income that’s not listed on your business’ financial records
  • Broken items resulting from a covered event or loss (such as glass)

When purchasing a BI policy, make sure the policy limits are sufficient to cover your company for more than a few days. After a major disaster, it can take more time than many people realize to get “back in business.”

This type of coverage is typically packaged together with either a business owners insurance policy aka BOP which combines property, liability and business income coverage.  and sometimes may be added onto property/casualty policy.

If you are looking for coverage for your Ohio business, give me a call for a quote or fill out the contact form on our website.

More information regarding business income “interruption” insurance may be found on the Insurance Information Institute’s website.

Because we are still in the midst of a pandemic, I wanted to include this information “word-for-word” from the III’s website on “Civil Authority”

Civil authority

This coverage – which typically does not exceed two consecutive weeks – applies when a civil authority (e.g., state, local or federal governmental entity) prohibits access to an insured’s premises due to a government order as a result of physical damage to an adjacent or nearby property, not owned or controlled by the insured, but rather the adjacent property of another.

Civil authority coverage extends business income (interruption) and/or extra expense coverage. Even when a government order prohibits or otherwise specifically restricts access to an insured premise, the policy may still require a direct physical loss before triggering coverage.

Note: In early February 2020 the Insurance Services Office (ISO) developed two new endorsement forms: “Business Interruption: Limited Coverage for Certain Civil Authority Orders Relating to Coronavirus,” and “Business Interruption: Limited Coverage for Certain Civil Authority Orders Relating to Coronavirus.” These forms provide coverage for actual loss of business income and extra expenses caused by a government order closing the insured’s premises or quarantining all or part of the premises and from government suspension of some modes of public transportation. If dependent properties are included in the coverage, such as a supplier’s or customer’s premises, then the coverage applies to the dependent property as well. Note that the forms were not filed with any states and are not being added to ISO’s form portfolio.


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