Business Interruption Insurance for US Businesses

Business interruption insurance, also called business income insurance, replaces the revenue your business loses when a covered event forces you to suspend or reduce operations. Commercial property insurance pays to repair or replace the physical damage. Business interruption coverage pays the bills while that repair is happening.

Core Coverage

What Business Interruption Insurance Covers

The policy replaces what your business would have earned if the covered event hadn’t happened, and it covers the ongoing fixed expenses you can’t stop paying during the closure. Both matter.

Lost Net Income

Replaces the revenue your business would have earned during the closure period, based on your documented financials.

Continuing Fixed Expenses

Covers rent, mortgage, loan repayments, utilities, and other obligations that don’t stop during a closure.

Also typically covered

Additional Categories Captured in a BI Policy

Beyond income replacement and fixed expenses, a well-structured BI policy responds to several other recurring categories of closure cost.

Payroll

Retain key employees through the closure rather than losing them during rebuilding.

Taxes

Tax obligations due during the interruption period.

Relocation costs

Expenses to move to a temporary location to continue operating.

Extra expenses

Costs required to keep operations running at reduced capacity during repairs.

Civil authority coverage

Lost income when a government order prohibits access to your premises due to a covered event nearby.

What Triggers a Business Interruption Claim

This is the part that catches business owners off guard more than any other aspect of BI coverage. Business interruption insurance doesn’t pay out for loss of income on its own. There has to be direct physical damage to covered property from a covered peril first. The income loss flows from the physical damage — it doesn’t stand alone.

A few examples of what does and doesn’t trigger coverage:

  • Covered: A fire destroys your production floor and forces a three-month closure.
  • Not covered: A power outage shuts you down for four days without physically damaging anything.
  • Not covered: A government-ordered closure without adjacent physical damage.
  • Not covered: A slow quarter because foot traffic dropped.

The underlying commercial property coverage also matters. Business interruption only responds to the perils covered in your property policy. If your property policy excludes floods and your building floods, your BI coverage won’t respond either. The two policies move together — which is why it’s worth reviewing both at the same time.

What Business Interruption Insurance Does Not Cover

Knowing the exclusions in advance is considerably more useful than discovering them during a claim.

Floods and earthquakes

What you need

Excluded from your underlying property policy by default. Separate endorsements required.

Pandemics and communicable disease

What you need

Specialty market options on request

Government shutdowns without physical damage

What you need

Civil authority requires proximate physical damage

Undocumented income

What you need

Keep clean, current financials

Utility interruptions

What you need

Off-premises utility interruption endorsement

Cyber incidents

What you need

Cyber liability insurance

Normal business slowdowns

What you need

Not insurable — responds to physical events only

Third-party claims from your closure

What you need

General liability

Timing Mechanics

How the Waiting Period and Restoration Period Work

Two timing mechanics in every BI policy determine when coverage starts and when it ends. Both are negotiable at placement and both affect your real-world protection significantly.

01

Waiting Period

The time between when the physical damage occurs and when BI benefits begin. Most standard policies set this at 48 to 72 hours. It’s designed to filter out very short disruptions. For operations where even a day of closure means significant revenue loss, a shorter waiting period is worth requesting.

02

Restoration Period

How long coverage runs. The policy pays until your business is restored to its pre-loss operating condition, typically capped at 12 months. A manufacturer waiting on custom equipment with a six-month lead time, or a restaurant facing a full structural rebuild, can easily run past 12 months.

03

Extended Period of Indemnity

An endorsement that extends BI coverage beyond the restoration period to account for the ramp-up time after reopening. A business that closes for six months doesn’t return to full revenue on day one. The extended indemnity period — typically 30, 60, or 90 additional days — covers that lag.

Both periods are configurable at placement. Speak to our team before binding so the timing terms reflect how long your operation would actually take to recover.

Supply Chain Risk

Contingent Business Interruption (CBI)

Standard BI covers income loss when your own property is damaged. Contingent business interruption covers income loss when a key supplier, vendor, or customer suffers physical damage that prevents them from operating, and that interruption flows through to your business. Your building is fine. Your equipment is fine. But your primary supplier’s factory burned down. That’s a CBI loss.

What triggers it

BI: Physical damage to your own covered property. CBI: Physical damage to a dependent third-party property (supplier, customer, or key partner).

What it pays

BI: Lost income and fixed expenses during your closure or reduced operations. CBI: Lost income and extra expenses resulting from the dependent property’s disruption.

Who needs it

BI: Most businesses with a physical location or equipment-dependent operations. CBI: Manufacturers, retailers, or businesses that depend on a small number of critical suppliers or customers.

Key limitations

BI excludes pandemics, floods/earthquakes (unless underlying property covers them), utility outages without physical damage. CBI is often limited to first-tier suppliers; coverage territory may not extend internationally; requires physical damage.

Coverage Calculation

How to Calculate How Much Coverage You Need

The most common BI mistake isn’t buying the wrong policy — it’s setting the limit too low. Businesses often anchor on last year’s net profit and call it done. That misses the fixed expenses that keep running during a closure.

01

12-month gross income figure

The base number for income replacement calculation — use documented financials, not estimates.

02

Fixed expenses that continue during closure

Rent, loan repayments, payroll for retained staff, taxes — these need to be in your limit, not just net profit.

03

Realistic restoration period

How long would it actually take to rebuild, restock, and reopen? Factor in equipment lead times and permitting.

04

Extra expense exposure

Cost of renting temporary space, expediting equipment, or outsourcing operations during repairs.

05

Extended indemnity period

How long before you’d be back to pre-loss revenue after reopening? That lag is insurable.

06

CBI exposure

Do you rely on one or two critical suppliers or customers? If so, their disruption is your exposure.

A rough starting formula: take your 12-month gross income, add your fixed operating expenses for the same period, and multiply by the fraction of a year your realistic worst-case restoration takes. That gives you a floor. The right number depends on your specific operation.

Process

How Rosella Places Business Interruption Coverage

Most brokers skip the income documentation conversation and just carry forward whatever the prior year’s limits were. Limits set without reviewing actual financials are often the reason a BI claim comes up short.

01

We review your income documentation first

Before we submit, we review your financials, work through a realistic restoration period for your type of operation, and flag whether your supply chain makes CBI worth adding.

02

We place BI alongside your property coverage

BI isn’t sold as a standalone policy. It’s placed alongside [commercial property](/solutions/commercial-property-insurance) or inside a BOP. The property placement decision affects what BI will and won’t respond to — we handle both together.

03

After bind, COIs in under two minutes

Certificates generated automatically. Limits set with actual financial review, not just carried forward from last year’s numbers.

Frequently Asked Questions

Get a quote

Tell us about your operation and we will come back with carrier options and limits sized to your actual exposure.

GET STARTED

Ready to Protect Your Business Income?

We’ll review your financials, work through your restoration period assumptions, and place BI coverage alongside your property policy with limits that reflect your actual exposure.

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