After a disaster event your business may not be able to resume conducting business right away.  Business Interruption insurance compensates you for the net loss that the business incurred if it didn't have to close temporarily. 

Business interruption insurance  (also known as business income protection, profit protection, or out-of-business coverage) works in conjunction with your property policy and provides coverage for events beyond your control such as fire, wind, hail, vandalism or damage from vehicles or aircraft that may interrupt your business. Flood, earthquake or glass breakage are typically not covered in a business income policy.

Business Interruption insurance can also cover cost such as:

-Lease or mortgage payments

-Utilities

-Relocation to temporary facility

-Payroll (Employees Salaries)

-Advertising

-Taxes

-etc.

Under Business Interruption insurance you can get additional coverage (referred to as options and endorsements).  These include:

-Extra Expense Coverage: this covers cost above and beyond net operating loss when the business is force to temporarily close operations.

-Dependent Property Coverage:  This covers things such as;

    -when your suppliers stops supplying your business

    -Shipments to customers are not being received

    -Direct delivery manufacturers are no longer fulfilling your orders

    -Etc.

-Utilities Services Coverage:  Covers loss due to disruption of utilities such as water, gas and electricity.

-Civil Authority:  Covers loss due to disruptions caused by civil authorities (e.g.  evacuation order).

How long will the insurance policy pay out for is called the “Period of Restoration”.  This period varies depending on the each business’s situation.  Once the business is able to operate again the payments stops.

When you get ready to file a claim with your insurance agency you will need the following.

-Financial projections you prepared prior to the loss.

-Monthly sales and production summaries

-Inventory/product detail

-Business income and sales tax returns (2 years)

Payments received from filing a Business Interruption Insurance Claims are taxable income.  IRC section 61 defines gross income as all income from whatever source derived.  

You can get Business Interruption Insurance as part of your Business Owner’s Policy (BOP); or Property policy or separately.

You can find business interruption insurance at these resources: