Business Interruption Insurance

Possibly the single most important protection for any small business. Running a company can be difficult without the right business insurance. One coverage most business owners need is business interruption insurance, also known as business income insurance and contingent business interruption coverage. It can help replace income you lose if you can’t open temporarily after a covered loss, like property damage. Combining this type of policy with a commercial auto policy often completes a small business protection plan.

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Six Components of Business Interruption Insurance

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Actual Income Loss

Interruption coverage protects against an actual loss. One which is sustained by an insured as a result of direct physical loss. Or damage to the insured’s property by a peril not otherwise excluded from the policy.

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Business Income

Usually, an insurer is responsible for the reduction in any net income. Coverage would apply if it is the result of suspension of operations (whether wholly or partially) due to a physical loss at an insured’s premises.

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Restoration Period

Insurers are liable for the loss of business income only during the period of restoration. This is often defined as the length of time required to rebuild, repair, or replace damaged or destroyed property.

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Extra Expense

May be an added endorsement which provides additional coverage, including for extra expense.

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Service Interruption

If included within the policy, a service interruption extension typically provides additional coverages. Direct physical loss, damage, or destruction to any utility service’s transmission lines and related plants and equipment supplying such services to an insured business.

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Contingent Business Interruption

A CBI extension is designed to cover an insured’s business income loss resulting from physical loss, damage, or destruction of property owned by others.

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