Complete Guide — Updated August 2026
Complete Guide to Business Interruption Insurance: Coverage, Costs & Who Needs It — 2026
Business interruption insurance (also called business income insurance) reimburses a business for lost income and continuing operating expenses when it must close temporarily due to a covered property loss — such as a fire, storm damage, or burst pipe. It bridges the gap between when the loss occurs and when you resume normal operations.
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Business interruption insurance (also called business income insurance) reimburses a business for lost income and continuing operating expenses when it must close temporarily due to a covered property loss — such as a fire, storm damage, or burst pipe. It bridges the gap between when the loss occurs and when you resume normal operations.
What It Covers ✓
- ✓Net income that would have been earned during the closure
- ✓Fixed operating expenses that continue during closure (rent, payroll, utilities)
- ✓Temporary relocation costs (Extra Expense coverage)
- ✓Loss from dependent property damage (suppliers, key customers)
- ✓Civil authority coverage — losses from government-ordered evacuations or closures
What It Does NOT Cover ✗
- ✗Closure from non-covered property losses (flood, earthquake — unless endorsed)
- ✗Pandemic or virus-related closures (most policies exclude after COVID litigation)
- ✗Voluntary closures
- ✗Losses below the waiting period (typically 72 hours)
Who Needs Business Interruption Insurance?
- →Restaurants and food service businesses
- →Retail businesses dependent on foot traffic
- →Manufacturing facilities
- →Healthcare providers
- →Any business where closure means immediate revenue loss
- →Businesses with significant fixed costs (rent, payroll) that continue during closure
How Much Does It Cost?
Included in BOP — no extra cost
Usually bundled
Standalone BI (small business)
$300–$1,000/year
Extended period of indemnity
Small add-on premium
Contingent BI endorsement
$200–$800/year
Key Terms to Know
Waiting Period
The period after a covered loss before BI coverage begins — typically 72 hours. A very brief loss (fire quickly extinguished, minor pipe burst) may not trigger BI if restoration happens within 72 hours.
Period of Restoration
The maximum time the policy pays — from the date of loss to when the business is (or should be) restored to its pre-loss condition. Typically 12 months; 24-month extensions are available.
Contingent Business Interruption
Extends BI to cover losses caused by damage to a key supplier, customer, or service provider. If your primary supplier's warehouse burns and you cannot get products, contingent BI covers your lost income.
Extra Expense
Covers additional costs to minimize the business interruption — like renting a temporary location or leasing emergency equipment. Separate from and in addition to lost income.
How to Get Business Interruption Insurance
Calculate your monthly revenue and fixed expenses to set an accurate BI limit
Extend the period of indemnity to 24 months if your business takes time to rebuild its customer base
Add contingent BI if you rely on one or two key suppliers or customers
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