Business interruption insurance (also known as business income insurance) is a type of insurance that covers the loss of income that a business suffers after a disaster. The income loss covered may be due to disaster-related closing of the business facility or due to the rebuilding process after a disaster.
If your business must close due to a covered loss, you'll be reimbursed for the revenue that you would earn during the closure. The insurance company must use your financial records to make sure they're accurate and up to date to receive full compensation. This is especially important for growing businesses whose revenue increases each year.
Another bonus that comes with business interruption insurance is coverage of fixed expenses like rent or electricity. Typically 23 percent of all sales go toward operating costs and even though your business is closed, you'll still owe monthly bills.
Instead of eating into your profit, this coverage can help pay for those bills. If you're comparing policies, make sure to look for one that includes extended coverage. Some policies will only include a few days' worths of coverage when it can take much longer to bounce back.
As for covered loss, your business interruption loss rider will mirror what's in your main policy. If theft isn't covered, it also won't be covered by your business interruption policy.
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