What Typical Business Interruption Policies Can & Can't Cover

Insurance basics tell us that each policy will have exclusions and limits. There is no exception here – so just because your business has to close its doors, doesn’t mean automatic coverage.

Let’s look at what is and isn’t covered in typical Business Interruption policies.

What it typically will cover…

Revenue – income that would have been earned during the business’ closure if operating normally.

Rent or lease payments – most lease agreements require the renter to continue making payments even if unusable. (Also, most exclude renters from any of the landlord’s insurance coverage.)

Relocation – expense of moving your operations to a temporary location. May include both moving and rent costs.

Employee wages – helps you with payroll expense while you’re not operating as normal.

Taxes – allows you to continue paying taxes.

Loan payments – helps keep up with existing payments.

Losses caused by covered damage preventing access to a building – usually called Civil Authority Coverage or Loss of Ingress or Egress. (Restrictions that keep people away from your business.)

What it typically won’t cover…

Utilities

Income that isn’t documented – be sure you are consistently documenting revenue streams, growth patterns, etc.

Losses from partial closures – if your business is only partially closed but still able to maintain operations.

Losses from closures caused by non-covered damages – if your Property insurance doesn’t cover the cause of loss, ie flood in most cases and earthquake in others, you won’t be covered.

Voluntary closure – if a family emergency or extended vacation is reason for closure.

Closure from downed power lines – usually only covered if the outage requires the business to be shut down for a minimum of 72 hours.