What can Business Interruption insurance compensate for?

Business Interruption insurance is designed to help businesses recover lost income and cover expenses during a period when operations are disrupted, typically due to a covered property loss. This type of insurance compensates for income that a business would have earned, but is unable to accrue while it is temporarily closed or unable to operate at full capacity due to circumstances such as fire, theft, or other disasters that impact physical property.

By focusing on compensation related to disruptions from property or general liability incidents, Business Interruption insurance provides financial support to ensure that the business can continue to meet its ongoing expenses, such as payroll, rent, and other operational costs during the interruption period. This makes it particularly crucial for businesses that rely heavily on consistent operational flow to generate income, as it helps mitigate the financial impacts of unforeseen events that affect physical assets.

In contrast, coverage for injuries to healthcare workers or employee turnover costs falls outside the purview of Business Interruption insurance, as they relate more to workers' compensation or human resource-related expenditures, respectively. Equipment failure might be covered under specific business equipment insurance, but would not be sufficient standalone for income loss, while Business Interruption insurance addresses income loss due to broader operational disruptions related to property or liability events.