Absolutely! Let’s break down Business Income Coverage (also known as Business Interruption Insurance) in clear, simple terms:
💼 What Is Business Income Coverage?
Business Income Coverage is a type of insurance that reimburses a business for lost income when it can’t operate due to a covered physical event (like fire, storm, or vandalism).
Think of it as your business’s financial life raft — it keeps cash flowing when your doors are closed due to damage.
✅ What It Typically Covers
1. Lost Net Income
- The revenue your business would have earned had it been operating normally.
- Based on your financial records (e.g., previous sales, profit margins).
2. Fixed Operating Expenses
- Rent or lease payments
- Utilities (electric, water, internet)
- Insurance premiums
- Property taxes
- Equipment leases
3. Payroll
- Wages for employees, especially key staff you need to retain while closed
📦 Example Scenario
🔥 A fire damages your bakery, forcing you to close for 2 months.
Business Income Coverage would pay for:
- Your projected income over those 2 months (e.g., $40,000)
- Rent on your storefront
- Utility bills
- Employee salaries
⏱️ Time Frame: “Period of Restoration”
- This is the window of time BI coverage applies — it starts after a waiting period (usually 48–72 hours) and lasts until your business is repaired and operational (up to policy limits).
⚠️ Note: It doesn’t cover losses after reopening, even if sales are slow.
🧾 What’s Not Covered
- Property damage itself (that’s handled by Property Insurance)
- Income loss from pandemics, viruses, or government shutdowns (unless specifically endorsed)
- Utility outages not caused by a covered peril
- Slowdowns or economic downturns
🧠 Optional Add-Ons to Consider
| Add-On | What It Does |
|---|---|
| Extra Expense Coverage | Pays for temporary relocation or workarounds |
| Civil Authority Coverage | Covers shutdowns due to nearby property damage |
| Contingent BI Coverage | Covers income loss if your supplier/vendor shuts down |
🔍 Quick Checklist to Understand Your Coverage
✅ What triggers a payout?
✅ What’s the waiting period?
✅ How long will coverage last?
✅ What’s your monthly benefit limit?
✅ Are payroll and extra expenses covered?
Would you like a printable one-page guide or a custom BI checklist for your specific business type?
