Business Income Coverage

A business might have to shut down due to circumstances beyond the owner’s control. A tornado might be approaching the area. There could be a fire at the location. Literally hundreds of things could cause a business to temporarily close its doors. And most companies don’t have the money to pay bills and other expenses when the business is closed temporarily. But that doesn’t stop the bills from coming in the mail. Business income insurance can possibly help a business survive during a temporary shutdown.

Business Income Insurance Explained

This type of insurance provides financial assistance when a business must temporarily close. For example, a business might have to close because a hurricane is approaching the area. Depending on the damage, the business could be closed for weeks. That means there’s no way for the business to turn a profit. Business income coverage provides funds when the business has suffered damage or property loss. But the damage must be caused by an event that the policy covers. Vandalism, theft, fire, and natural disaster are the most common types of covered perils.

Who Needs this Coverage?

Any business can benefit from this coverage. But it’s probably most beneficial for companies located in areas with poor weather. The area could be prone to tornadoes or floods. Or perhaps it’s in an area that commonly has hurricanes or wild fires. The insurance is a wise investment if there’s any chance of the business experiencing a disaster.

How it Works

When an incident occurs, the policyholder files a claim with the insurance company. There must be proof of how much income the business had in the previous year for the same time period. For example, say that a wild fire occurs in July and forces an evacuation in the area. The business must remain closed until it’s safe to return. If the owner decides to file a claim, they’ll need proof of how much they earned during July the previous year. This helps determine how much the claim will pay. The payout should account for net income and normal operating expenses, including payroll.

Contact an Insurance Agent

An insurance agent can provide more details about coverage options. The policy that’s best for one company might not work well for another. Just keep in mind that most policies have a waiting period. That means the insurance doesn’t immediately become available to use.


The main benefit of business income insurance is the financial aid. A business can continue to pay its employees, bills, and normal operating fees when the business isn’t fully operational. Without having to worry about loss of income, business owners can focus on restoring their business. The cost is worth the investment considering the benefits.