What does 'business interruption insurance' cover?

Business interruption insurance is designed to cover the losses that a business experiences when it is unable to operate due to a specific covered event, such as a fire, natural disaster, or other unforeseen incident that disrupts normal operations. This type of insurance helps to mitigate the financial impact of these interruptions by providing compensation for lost income and ongoing expenses that must still be paid, such as rent and utilities, even when the business is not generating revenue.

While costs associated with resuming normal operations may be related to the overall recovery process after an interruption, the core function of business interruption insurance is to address the direct loss of income caused by the inability to conduct business as usual. Other options, such as legal fees for disputes or insurance for employee liability claims, pertain to different types of coverage that are not related to the specific purpose of business interruption insurance.