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BUSINESS INCOME INSURANCE

Keep your business afloat during a major interruption

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Forced to temporarily close? Business Income insurance keeps your business afloat until you can reopen.

Lost income

You can’t operate while your cafe is closed to fix water damage after heavy rain.

Moving and relocation costs

A tree falls on your office roof and you need to temporarily move while it gets removed.

Employee wages

A burst pipe closes your shop, but you still need to pay employees while the repairs are underway.

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Here’s everything you need to know about Business Income insurance:

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What is Business Income insurance?

Business income (BI) insurance (also known as business interruption insurance) helps to keep your business operational if an unexpected loss forces you to close for a short time. BI coverage is part of goods, gear and inventory insurance and is designed to protect you against loss of business income and extra expenses if you experience damage or destruction to your business property.

If you have goods, gear and inventory insurance, you also therefore have BI insurance. Business income coverage is activated when the main business premises, property or equipment are destroyed due to a direct loss (such as a fire that affects your work space).

For example, a water main bursts at Sam’s clothing store. His goods and gear insurance covers the cost of replacing the ruined furniture and inventory and his BI insurance covers two weeks’ revenue while the store is closed, as well as salaries for his employees and the cost of hiring cleaners.

What does Business Income insurance cover?

Business income insurance comes into effect if there is an “actual loss sustained,” which is direct physical damage to your property that results in an interruption to your business that causes income loss.

BI covers these main types of expenses that result from a loss:

Extra expenses

BI can cover additional expenses that would not have been incurred if the original loss hadn’t happened, such as having to rent another store for six months. These expenses can include:

  • Relocation and equipment rental coverage
  • Cleaning and repairs coverage

Business owners must be economical and keep these expenses to a minimum.

Business income 

BI helps to cover the lost income that results from suspension of operations due to a physical loss. This can include:

  • Payroll or salary coverage for employees
  • Net income (pre-tax) that would have been earned
  • Normal operating expenses that must be paid even during the suspension of operations

Operations coverage or service interruption 

BI can help cover normal operating expenses or services that are interrupted from a direct loss or damage to electrical, gas, water, sewer, telephone, or other utilities.

Note that there is a “period of restoration” for business income coverage, which is a defined time limit on the coverage offered by BI while a business rebuilds, repairs or replaces damaged or destroyed property. At Next, the period of restoration is six months.

Start a free quote to explore your options.

What types of losses are excluded from Business Income coverage?

Business income insurance helps keep your business afloat if you experience major disruptions caused by fire, hail, water damage or vandalism.

Business income insurance does not cover professional mistakes you made, such as missed deadlines or acts of negligence. If you made a mistake or didn’t maintain your property due to your own lack of attention, you will not qualify for a business income insurance claim.

For example, Barbara owns a restaurant. She knows she’s supposed to empty and clean her walk-in cooler on a regular basis but Barbara is always so busy running her business that she keeps putting it off. When the walk-in grows mold and ruins thousands of dollars of ingredients, Barbara has to close her restaurant while she cleans it and replaces all the food.

Unfortunately, Barbara can’t make a claim on her goods, gear and inventory insurance or receive BI compensation while her restaurant is closed because she didn’t properly maintain her equipment.

Business income insurance also doesn’t cover business suspensions that were caused by government action, earthquakes or animal infestations.

Note that the property coverage in your business owners policy (BOP) would help pay to repair the damaged building if you own it. BI insurance does not cover these types of repairs.

Does Business Income insurance cover covid-related interruptions?

Many businesses experienced unforeseen closures during the COVID-19 pandemic and suffered extreme financial losses. While business income insurance covers many instances of unexpected business closures, it does not include any pandemic-related losses.

Who needs Business Income insurance?

Small business owners who rent property in order to operate a business, such as a brick-and-mortar shop, restaurant, studio or office that you own or work out of, should consider goods, gear and inventory insurance to cover all your inventory, equipment, upgrades and furniture. Business income (BI) insurance is part of this policy and helps protect against lost income after a covered event results in a temporary closure of your business.

For example, a fire destroys Sam’s store and it will take at least eight months to replace and rebuild the damage. The store is uninhabitable and Sam moves into a new space. Business income will help pay for the net income he would have received had he been able to continue operating.

Business come coverage may also help reimburse Sam for lost income from the destroyed merchandise and extra expenses incurred by his need to temporarily relocate his business because of the fire, such as rent at the new location and the associated moving and setup costs.

Why is Business Income insurance important?

Business income insurance is crucial for making sure your business stays afloat in the event you need to temporarily close or relocate. If you run your business out of a physical space, it’s a good idea to be covered if a sudden move becomes necessary.

Key benefits of business income insurance are helping you navigate this disruption if something happens to your store, shop, studio or restaurant.

BI insurance is essential for keeping your business from going under during a major interruption. You won’t have to worry about how to pay your employees or cover the rent at a new location if a fire or act of vandalism destroys your space.

Can I buy Business Income coverage on its own?

Business income coverage helps pay for lost income while a business is forced to close due to some unexpected events, such as accidents or storms. It’s included when you purchase a good, gear and inventory insurance policy — but cannot be purchased on its own without this policy.

Business income insurance is only available as part of goods, gear and inventory insurance and is not available as a standalone type of insurance.

When does Business Income insurance kick in?

If you have an approved claim under your goods, gear and inventory policy then business income (BI) is automatically activated if it meets the right criteria.

For example, a water main breaks in Linda’s photo studio, destroying all of her negatives, cameras and frames, including the artwork she has for sale. Goods and gear helps Linda pay to replace her photographs, inventory and equipment. BI helps Linda pay the rent on a temporary studio as well as the wages for her assistant.

What isn’t covered by Business Income insurance?

Your business income policy covers many different situations and types of loss, but it doesn’t cover everything. You might need to buy other types of insurance, depending on your business.

General Liability insurance

General liability is the most common type of insurance small business owners buy because it covers many basic risks that most businesses face.

It can provide financial help if your business is held responsible for an injury to someone other than an employee or damage to property that doesn’t belong to you.

Professional Liability insurance

BPP insurance does not cover professional mistakes. For that, you’ll need professional liability insurance, also known as errors and omissions insurance. It can help cover costs if a client claims you gave bad advice, made a mistake or missed a deadline and caused financial harm.

Workers’ Compensation insurance

If you have employees, you are legally required in most states to have workers’ compensation insurance. A workers’ comp policy will cover medical bills for work-related injuries or illnesses, lost wages, and it provides important liability protections for your business.

Commercial Auto insurance

Most personal auto insurance policies won’t cover you for injuries or damages if you drive for business purposes. You are required by law in most states to have commercial auto insurance if you or your employees use a business-owned vehicle.

How much Business Income coverage do I need?

The amount of business income (BI) coverage you get is determined by the goods, gear and inventory policy you choose, as BI is part of goods and gear.

In general, BI insurance has a coverage limit that is the maximum amount you will receive towards a covered claim. Losses that go over the coverage amount will be paid out of pocket so it’s essential to choose coverage limits that are appropriate for your business.

Here are a few things you may want to consider when you choose the goods, gear and inventory package (and therefore the BI package) for your business:

  • How long it would take to get your business back up and running after a loss
  • How well protected the building is in which you rent your space
  • If there are working fire alarms and sprinkler systems in the building
  • If there is available and appropriate space to rent if you need to temporarily relocate your business

How do I get Business Income insurance?

Business income insurance is part of goods, gear and inventory insurance, which means you only need to buy one policy.

Start an instant quote to see options for your business. Here’s how the process works:

We’ll ask you some basic questions about your business and operations, including:

  • Your industry
  • Where you do business
  • How many years you have owned the business
  • Number of employees
  • Expected annual revenue
  • Recent insurance and claims history

After you share your information, you’ll have instant access to a customized goods, gear and inventory and BI insurance quote, as well as other recommended coverage.

If you like what you see, you can adjust the package limits and make your purchase. Your insurance will begin immediately after payment, and you’ll have access to your certificate of insurance.

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Let’s find the coverage you need for your business

Business insurance is divided into different policies. We offer seven types so it's easy to get the coverage that fits your business.

General Liability Insurance General Liability

Protect yourself from accidents that cause physical injury or damaged property.

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Professional Liability or Error and Omissions Insurance Professional Liability/E&O

Shield yourself from lawsuits that claim your work errors caused financial losses.

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Workers' Compensation Insurance Workers' Compensation

Cover medical bills and lost wages if your employees have an accident at work.

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Commercial Auto Insurance Commercial Auto

Stay on the road with coverage for dents, tows and damage to someone else’s vehicle.

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Tools & Equipment Insurance Tools & Equipment

Upgrade your general liability coverage to protect any gear that’s stolen, damaged or lost.

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Commercial Property Insurance Commercial Property

Keep your building, inventory and equipment protected from fire or water damage.

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Business Owner’s Policy Insurance Business Owner’s Policy

Combine general liability and commercial property into one policy to protect your business.

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