What type of coverage does business interruption insurance provide?

Business interruption insurance provides compensation for lost income when a business is unable to operate due to property damage. This type of insurance is essential for businesses that rely on continuous operation to generate revenue. For instance, if a fire or natural disaster damages a commercial space, business interruption insurance helps cover the income lost during the period when the business is unable to function normally and may also cover continuing expenses such as rent, utilities, and payroll.

The coverage is specifically designed to address the financial impact of disruptions caused by insured physical events, which directly links to the need for coverage when actual property damage occurs. Consequently, businesses can maintain some level of stability during recovery, ensuring they can reestablish operations without incurring overwhelming financial hardship.

Other types of insurance mentioned, such as coverage for employee injuries or third-party liability, do not involve the loss of business income due to operational interruptions, which is the critical focus of business interruption insurance.