Business interruption insurance covers income loss, and expenses incurred, after a specified covered peril interrupts regular business operations. Business Interruption Insurance
BII is a type of insurance covering the loss of income that a business suffers following a disaster. The income loss covered can be due to a disaster related to the closing of the company installation or because of the rebuilding process following a disaster. It differs from property insurance in that the property insurance contract only covers the physical harm to the company, whilst the additional cover allocated by the company interruption policy covers the profit that would have been earned. This policy provision is applicable to all kinds of businesses, as it was designed to place a business in the same financial position it’d were in if no loss had occurred.
This kind of coverage isn’t sold as a standalone policy but could be added to the company property insurance contract or comprehensive package policy like a business owner’s policy. Since interruption of business is included as part of the company’s primary policy, it only pays out if the main cause of the loss is covered by the overarching policy. This coverage extends till the end of the company interruption period based on the insurance contract. Most insurance plans define this period as being from the date of the covered danger, and the damaged property is restored and returned to operations under the same condition that existed prior to the disaster. Additionally, businesses can buy contingent business interruption coverage, which pays when a business is not able to operate gainfully because of an event that damages the company premises of one of its suppliers or clients, thus preventing it from participating in normal trade.