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Business interruption coverage, also called business income, replaces the profit you lose and the fixed expenses that continue, payroll, rent, loan payments, while your operations are shut down by physical damage a property policy covers, like a fire or a storm. It can also pay extra expenses to keep operating from a temporary location. The two numbers that decide whether it works are the limit, which must reflect real revenue, and the period of restoration, which must reflect how long a rebuild genuinely takes.
The standard trigger is direct physical damage to your property from a covered peril. The fire that closes your plant triggers it; the supplier failure, utility outage, or market disruption that idles you without touching your building generally does not, unless specifically endorsed. Those endorsements exist and matter: contingent business interruption covers shutdowns caused by damage at a key supplier or customer, civil-authority coverage responds when authorities close access to your area, and utility-services coverage responds to off-premises power failure. Each is a deliberate addition, not a default.
Coverage runs from the damage until the business is, or reasonably should be, restored, and standard forms often cap the extension at 12 months. Real rebuilds disagree: permitting, long-lead equipment, contractor scarcity after a regional event, and re-ramping production routinely take 18 to 24 months. A business whose rebuild takes 20 months on a 12-month form self-funds the last 8 months of payroll and lost profit. Setting the extended period against an honest rebuild timeline is the single highest-leverage decision on the form.
The limit should be built from a business income worksheet: revenue, less non-continuing expenses, plus continuing expenses and payroll you would keep paying, projected over the realistic restoration period, with seasonal weighting if your revenue concentrates. Underinsuring quietly is easy because the premium tracks the declared value. The discipline is annual: as revenue grows, the worksheet has to grow with it, or the coverage silently shrinks relative to the business it protects.
Standard property-based forms require physical damage, which is why most pandemic claims failed. Cyber-driven downtime is covered under cyber policies' business interruption sections, a separate placement with its own waiting periods and limits.
It pays costs beyond normal operating expenses to keep the business running after damage: a temporary location, rented equipment, expedited freight. For service businesses that must not go dark, extra expense is often more valuable than the income coverage itself.
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