Blog Articles: What Is Business Income Coverage?

Understanding the Business Income Definition

Business income insurance helps replace your lost income if you can’t operate because of property damage from:

Fire
Theft
Wind

For example, if you must temporarily close your restaurant after a kitchen fire while repairs get made, this insurance can help cover your lost income. You can use this coverage to help pay ongoing expenses, such as rent, mortgage payments and payroll.

Other names for this insurance are business interruption insurance and extra expense insurance.

Business Income Insurance Terms

To fully understand your business income insurance, you’ll need to understand these key terms:

Actual Loss Sustained

Business Income

Period of Restoration

Waiting Period

Extra Expense

Service Interruption/Contingent Business Interruption (CBI)

Interruption by Civil Authority

What Does a Business Income Policy Cover?

Your business income policy can help replace lost incomes if you need to close your business suddenly. It applies an extra layer of protection beyond a commercial property insurance policy.

The Hartford also offers endorsements to add more protection against other causes of loss. For example, you can add a business income extension for off-premises utility services if there’s an interruption in utilities, such as power, communication or water services. Or you can add extended business income coverage to protect against a slowdown after reopening.

What Is Not Covered by Business Income?

Business income insurance won’t help cover lost income in the event of:

Closures from inoperable power lines. Adding an endorsement to your policy can help cover this.
Undocumented income not listed on your business’ financial records.
Flood damage, which you’ll need a separate policy for.

Examples of Business Income Coverage

To better understand how business income coverage can help replace your lost income, consider these scenarios:

Your catering shop is in an attached building. A fire breaks out in the store next to yours and it spreads to your business. As a result, you must shut down to repair the damages.
After you close your computer store for the day, thieves break in and steal valuable inventory. Because of this, you temporarily close while you replace your inventory.
A hurricane makes landfall in your area, causing extensive wind damage to the building where you operate your sports equipment store. You must close your business to repair the damages.
The payout amounts you receive on your business income coverage are based on your business’ income and expense records. As a business owner, you should store these records in a safe location. You may even want to store them off-site or in digital locations.

Information from: thehartford.com

2025-06-23 17:20:58