🏚️ Business Interruption Insurance: More Than Property Coverage
Most business owners have property insurance to protect buildings and equipment. But that doesn’t help when your revenue suddenly stops. Business interruption insurance bridges the gap—replacing lost income and helping cover ongoing expenses when you’re forced to pause operations due to a covered event.
📍 Example: A fire damages your café, and you’re closed for three weeks. Business interruption insurance can help cover your income loss, employee wages, and rent while you rebuild.
🔥 Direct Physical Damage: The Trigger for Coverage
Business interruption insurance typically requires direct physical damage to your insured property for coverage to begin. This damage must be caused by a covered peril, such as:
- 🔥 Fire
- đź’¨ Windstorm
- đźš° Water damage (excluding flood)
- đź’Ą Vandalism or explosion
- ⚡ Certain types of equipment breakdown
If there’s no physical damage (like a power outage with no equipment loss), standard coverage may not apply unless endorsed otherwise.
đź’Ľ What Is Business Income Coverage?
Business income coverage is the part of your policy that reimburses your lost income during a closure. It ensures you can still pay:
- đź’µ Rent or mortgage
- 👩‍💼 Employee wages
- 🧾 Loan payments
- 🔌 Utilities and other fixed costs
🧮 How It’s Calculated:
Your insurance company will estimate:
- Net income you would’ve earned if no loss occurred
- Ongoing operating expenses you still need to pay
They’ll typically use your recent tax returns, sales reports, and profit-and-loss statements to come up with a fair number.
Some policies also include extra expense coverage to reimburse the cost of renting a temporary space or speeding up repairs.
đź”— What Is Contingent Business Interruption?
Not every disruption happens in your own building. Sometimes, your business depends on someone else—like a supplier, manufacturer, or major client.
Contingent business interruption (CBI) covers income loss caused by a third party’s disaster. 🚧
📦 When CBI Is a Good Idea:
- You rely on a single supplier for key materials
- You sell through a major distributor or retailer
- Your product is stored in an offsite warehouse
- You use a specific manufacturing facility
If that third party experiences damage that halts your ability to operate, CBI can keep your revenue protected.
âś… Should You Get Business Interruption Insurance?
If you run a brick-and-mortar business, rely on physical space or equipment, or have key third-party partners—yes. ✅
Without business interruption insurance, you could be left covering expenses with zero income during a shutdown. That can be hard to bounce back from.
📞 Let’s Protect Your Business Income
Not sure if your current policy includes the coverage you need? Want to learn more about adding contingent business interruption?
Reach out to The Luxury Group today for a full review and customized coverage options. We’ll help you stay protected—no matter what comes your way. 🛡️
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