When a fire, windstorm or burst pipe shuts down a business, the property damage is only part of the loss. Rent, loan payments, payroll and utility bills keep coming while revenue stops. Business income insurance is what pays those bills until you reopen.
What it covers
Business income coverage replaces the net income you would have earned and pays continuing operating expenses while your business is closed or slowed by a covered physical loss. It's typically paired with extra expense coverage, which pays reasonable costs to reopen faster — renting temporary space, expediting equipment or paying overtime.
How much do you need?
The right limit depends on how long it would realistically take to rebuild, re-equip and win back customers. For many businesses that's six to twelve months or longer, especially when permits, contractors and equipment lead times are involved. Your agent can walk through a simple worksheet using your profit and loss statement.
Details that matter
- Waiting period: many policies don't pay for the first 72 hours.
- Period of restoration: coverage usually ends when you could reasonably reopen, not when sales recover. Extended period of indemnity adds weeks or months afterward.
- Civil authority: covers losses when access is blocked by government order due to nearby damage.
- Dependent property: covers losses when a key supplier or customer suffers physical damage.
- Utility service interruption: covers outages from off-site power or water failures.
What it doesn't cover
Business income generally requires physical damage from a covered peril. Slow seasons, market changes and most closures without physical damage aren't covered.
Many businesses that close after a major loss never reopen. Business income is often the difference.
This material is for general information only. Coverage depends on the actual policy language, and availability varies by carrier.