What is Business Interruption Insurance?
Business Interruption Insurance (BII) is a type of insurance coverage that protects businesses from loss of income due to unforeseen events that disrupt normal operations. This coverage is crucial for businesses that rely on consistent revenue, as it helps mitigate the financial impact caused by events such as natural disasters, fires, or other unforeseen circumstances.
In the event of a covered loss, Business Interruption Insurance typically compensates the policyholder for lost revenue, fixed expenses, and other operational costs incurred during the downtime. This allows businesses to maintain financial stability while they recover and resume normal operations.
Key Features of Business Interruption Insurance:
- Loss of Income Coverage: Compensates for lost net profit during the downtime.
- Fixed Expenses: Covers ongoing expenses such as rent and utilities that must be paid regardless of revenue loss.
- Extra Expense Coverage: Offers reimbursement for additional costs incurred while attempting to resume operations.
Business Interruption Insurance is often purchased as part of a comprehensive property insurance policy. It is essential for business owners to assess their risk exposure and determine the appropriate coverage limits to ensure that they are adequately protected against potential income loss.