What is business interruption insurance?

Business interruption coverage is technically called 'business income' in most modern commercial property policies. When a covered peril (fire, storm, vandalism, equipment breakdown with the right endorsement) interrupts business operations, business income pays lost net profit and continuing fixed expenses (rent, payroll, utilities) during the restoration period. The restoration period typically runs from the date of loss until the business could reasonably resume operations, not necessarily until full recovery. Most policies include extra expense coverage too, which pays above-normal costs to maintain operations during the loss (temporary location rent, expedited shipping, equipment rental). Setting accurate business income limits requires looking at your annual revenue, profit margin, and how long it would take to rebuild and re-stock after a major loss.