The Complete Guide to Business Interruption Insurance

Disasters don’t send invitations. A fire, flood, or equipment breakdown can halt your operations overnight. While property insurance covers physical damage, business interruption insurance protects your income when your business can’t operate.

Let’s break down what this coverage includes, why it matters, and how to make sure you’re truly protected.

✅ What Is Business Interruption Insurance?

Business interruption insurance, also known as business income insurance, covers the loss of income and extra expenses your business incurs when a covered event forces you to temporarily stop operations.

It’s not about the physical damage — it’s about the financial ripple effect that damage causes.

📌 What Does It Cover?

• Lost income – revenue you would have earned during normal operations

• Fixed expenses – rent, salaries, utilities, insurance premiums

• Temporary relocation costs – moving to and operating from a new location

• Loan payments – to prevent credit issues during downtime

• Extra expenses – anything necessary to speed up recovery and reduce downtime

🔥 When Does It Kick In?

A business interruption claim usually starts after direct physical loss or damage from a covered event, such as:

• Fire

• Storm or water damage

• Vandalism

• Equipment failure (if included in your policy)

It’s important that the income loss is directly tied to property damage.

🚫 What’s Not Covered?

• Closures without physical damage (e.g., pandemics unless explicitly included)

• Utilities outages that occur off-site

• Losses from partial operations (you’re still operating, just at lower capacity)

• Undocumented income

📊 Why It’s Critical for Your Business

Imagine this: your business closes for 60 days after a fire. Your expenses keep coming. Employees expect paychecks. You have rent to pay. Loans to service.

Business interruption insurance is what keeps your business alive while you recover.

🧠 Smart Preparation Tips

1. Know your numbers – track income and fixed expenses regularly

2. Understand your policy – duration of coverage and policy limits matter

3. Have a recovery plan – businesses with contingency plans recover faster

4. Work with an independent agent – tailor your coverage to your exact needs

💼 Do You Need Business Interruption Coverage?

If your revenue depends on a physical location or equipment, this coverage is a must. Retail stores, restaurants, salons, manufacturers – any business that can’t operate remotely is at risk.

🔚 Final Thoughts

Business interruption insurance isn’t a luxury — it’s a lifeline. It doesn’t just protect your bottom line — it protects your employees, your credit, and your future. Don’t wait for a disaster to find out what your policy doesn’t cover.

💼 Let THAgency Find the Best Policy for You

At Toby Hansen Agency, we work with nearly 100 insurance carriers to make sure you get the best coverage at the best price. Whether you’re a startup or a well-established brand, we help you reduce premiums without sacrificing protection.