Business Insurance

Business Interruption Insurance

Business interruption insurance keeps a business financially afloat during the period it cannot operate due to a covered physical loss such as fire, windstorm, or burst pipes.

Last reviewed: May 2026 · Editorial methodology

Definition

Business interruption insurance (BI) compensates a business for lost net income and continuing operating expenses — rent, loan payments, payroll — during the period it is unable to operate due to a covered physical damage event. Most BI coverage is triggered by direct physical loss or damage to covered property, which became a major litigation issue during COVID-19 when courts largely ruled that virus-related closures did not constitute physical loss. A restaurant that earns $50,000/month in revenue and must close for three months due to a fire would rely on BI coverage to bridge the financial gap while rebuilding. BI coverage typically includes a waiting period (deductible period) of 24–72 hours before benefits begin and pays through the restoration period — the time needed to rebuild or repair the property. Business interruption limits should be calculated as 12–18 months of gross profit, not just net income, to account for extended restoration timelines. Contingent business interruption coverage extends BI protection to losses caused by damage to a key supplier's or customer's property, an increasingly important consideration for supply-chain-dependent businesses.

Where this term matters

Business Insurance →/business/bop →/business/restaurant-insurance →

Tip

Glossary definitions are educational. Always check your own policy language — insurers can define common terms differently from one another. When in doubt, request a written explanation from your agent.

Related terms

Business Income CoverageBusiness income coverage is the ISO policy form name for what is commonly called business interruption insurance, providing income replacement during a forced operational shutdown.Extra Expense CoverageExtra expense coverage compensates businesses for the additional costs — temporary space rental, expedited shipping, overtime labor — needed to keep operating during recovery from a covered property loss.Business Owner's Policy (BOP)A BOP packages general liability and commercial property insurance into one affordable policy, designed specifically for small to mid-sized businesses.Commercial Package Policy (CPP)A Commercial Package Policy (CPP) offers mid-sized and larger businesses a flexible framework to bundle multiple coverage lines into one policy, providing broader customization than a standard BOP.

Related guides

Source: Cover Forge USA editorial team|Last verified: May 2026|Methodology
Definitions are educational and may be simplified. Always refer to your policy contract and consult a licensed agent for terms that affect coverage decisions.
CF

Cover Forge USA Editorial Team

Editorial Lead

This article was researched and written by the Cover Forge USA editorial team against federal sources (NAIC, CMS, FEMA, DOL, SSA, state DOIs) and standard policy forms. Bylines organize content by topic — they do not assert individual licensure. See our editorial-policy for details.

Reviewed June 2026

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