Business income insurance covers your loss of revenue during a business shutdown from a covered event, including a direct physical loss such as fire, theft, and wind damage. It provides an extra layer of financial support that can help your business stay afloat while you repair and recover from the property damage to your business.

Specifically, it will pay for your:

Lost revenue
Business interruption insurance can help replace what your business would have earned had it not suffered the covered loss.

Rental or lease payments
Payments are typically due even if your site is uninhabitable.

Relocation expenses
Business interruption insurance typically covers your moving and rental costs.

Employee wages
With a business interruption rider, you will still be able to make payroll.

Taxes
Your tax obligations will continue even if your business is temporarily closed.

Loan payments
Coverage will ensure that your loans won’t go delinquent.

Losses due to inability to access your facility
If access is blocked to your business, your insurance will provide assistance until you can return. If you lose access to your office or facility, you typically have to wait at least 72 hours before you can begin collecting benefits.

Business income insurance only covers an actual loss of business income. It does not cover certain operating expenses, such as advertising and marketing campaigns, or any income loss that isn’t documented.

It also wouldn’t cover an income loss if your business was still allowed to operate during a pandemic or weather event, or if you closed your business because of staffing problems arising from such incidents.

Your income insurance coverage would also exclude losses from downed electric lines and power outages, or natural disasters and extreme weather events that would be covered by a different policy, such as flood insurance.

Any business that requires a commercial property to generate revenue is a good candidate for this type of insurance. In addition, companies that lack sufficient cash reserves to cover a month’s worth of payroll and other overhead expenses should strongly consider buying business interruption coverage.

Most small business qualify for business interruption insurance. However, insurers typically don’t write coverage for businesses without fully dedicated sites, such as home-based businesses.