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.
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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 2026-06-14
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