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March 27, 2024

How Business Interruption Insurance Works

Businesses of all sizes and across all sectors must account for the possibility of something going wrong. Regardless of how meticulous or diligent you may be in attempting to avoid accidents, errors or other incidents, some unforeseen hurdles may be inevitable and even unavoidable. In the aftermath of these situations, your organization may be unable to conduct routine operations and may be adversely impacted, potentially leading to significant financial losses and unplanned expenses. Fortunately, business interruption insurance can provide a financial safety net for these times.

What Is Business Interruption Insurance? woman in white dress shirt sitting on chair

Business interruption coverage should be considered an integral component of most companies’ loss control measures. These policies, also known as business income insurance, can provide critical funds and resources in the wake of covered incidents that might otherwise incur catastrophic financial consequences. By securing and maintaining an adequate business interruption policy, your organization can rely on financial assistance to limit what might otherwise be insurmountable out-of-pocket losses.

What Does Business Interruption Insurance Cover?

Business interruption insurance can provide financial assistance for many losses and expenses following a disruption of typical functions. For example, if a broken pipe, fire or natural disaster forces you to shutter your business premises, or an accident breaks essential equipment, you can file a claim against your policy. If approved, your insurance company may provide a payout up to your coverage limits to help absorb resulting losses and expenses, such as the following:

  • Reduced revenue, such as if your business loses income due to a temporary closure
  • Rent and loan payments, such as a mortgage for your building or outstanding debts
  • Employee wages and payroll to help your workforce maintain income during an interruption
  • Relocation costs, such as if you must temporarily move your operations to a different site
  • Additional expenses, including if you need to train or educate employees on how to use new machinery or equipment

Where Can I Get Business Interruption Insurance?

There may be several ways for your business to acquire and retain this crucial loss control measure. Business interruption insurance may be available as a standalone policy from many insurance companies. This type of coverage is also typically a core pillar of a business owners policy, which bundles several types of coverage together under a single arrangement. Additionally, business interruption insurance may be available as an endorsement for commercial property insurance.

Get the Right Coverage

Regardless of how you secure business interruption coverage, doing so should be a top priority. After all, even the most experienced and risk-averse companies may eventually have normal operations disrupted, and lacking adequate coverage in such situations could have far-reaching ramifications for your finances and future.

Contact the team at My Insurance Store today to learn more about business interruption insurance and how you can secure appropriate coverage.


This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information. 


Categories: Business Interruption

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