Property insurance pays to rebuild what a fire or storm destroys. But rebuilding takes time, and during that time the business earns nothing while its bills keep coming. Business interruption insurance covers that second loss, the income that stops when the doors do.
Business interruption coverage, often part of a commercial property policy, replaces the income a business would have earned and covers continuing expenses, rent, payroll, loan payments, during the period it cannot operate because of a covered event. The goal is to keep the business financially whole through the restoration period, so a temporary disaster does not become a permanent closure.
Coverage is generally tied to direct physical damage from a covered peril, a fire that closes the shop, storm damage that halts production. The link to physical damage matters: interruptions without it, as many businesses learned during recent events, are often not covered. Some policies add contingent business interruption for disruptions to key suppliers or customers, but the standard trigger is physical loss.
The key variables are the length of the covered restoration period and how the lost income is calculated, both of which should reflect how long the business would realistically take to recover. Underestimating the recovery time is a common way this coverage falls short when it is finally needed.
Rebuilding takes time. Insure the income lost to it.
This is general information, not personalized insurance advice. Coverage terms, definitions, and availability vary by policy and provider.