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Business Interruption Insurance


Business Interruption Insurance

What is Business interruption insurance?

Business interruption insurance (also known asbusiness income insurance) is a type of insurance that covers the loss of income that a business suffers after a disaster. The income loss covered may be due to disaster-related closing of the business facility or due to the rebuilding process after a disaster.

How much is business interruption insurance?

Unlike Dorst, most business owners don't have interruption insurance, says Richard McGrath, independent broker at McGrath Insurance in Sturbridge, Mass. Cost may be a factor in why entrepreneurs pass on such coverage: Policy prices range from $750 to $10,000 or more, depending on business size.

What is business income and extra expense?

Commercial property insurance covering loss of income suffered by a business when damage to its premises by a covered cause of loss causes a slowdown or suspension of its operations. Coverage applies to loss suffered during the time required to repair or replace the damaged property.

What is contingent business interruption?

Contingent business interruption insurance and contingent extra expense coverage is an extension to other insurance that reimburses lost profits and extra expenses resulting from an interruption of business at the premises of a customer or supplier.

What is business income insurance coverage?

Business Income coverage (sometimes referred to as Business Interruption coverage), is protection against loss of income or profits, in which a business has suffered a property loss or damage from a covered peril, such as a fire, natural disaster, theft or vandalism.

What is the waiting period for business income coverage under the two business income coverage forms?

The Business Income coverage begins after a 72 hour (3 days) waiting period or deductible. Extra Expense coverage begins immediately following damage/destruction to property. Under the Maximum Period of Indemnity settlement provision, your Business Income recovery is limited by time.

What is a business income form?

DEFINITION of 'Business Income Coverage Form' An insurance policy that covers a company's loss of income due to a slowdown or temporary suspension of its normal operations stemming from damage to its physical property. Coverage typically includes the loss of income less normal operating expenses.

Business Interruption Insurance Calculation

BI = T x Q x V


BI = business interruption

T = the number of time units (hours, days) operations are shut down

Q = the quantity of goods normally produced, or sold, per unit of time used in T

V = the value of each unit of production, usually expressed in profit