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Business income insurance and business interruption insurance refer to the same coverage and are often used interchangeably. Insurance companies may use either term. This coverage helps cover the cost of lost income if your business needs to temporarily shut down due to a covered loss.
What’s the Difference Between Business Interruption and Business Income Insurance?
Business owners often ask, “What’s the difference between business income vs. business interruption insurance?” The answer is simple. Business income insurance is the same as business interruption insurance. This coverage helps replace your lost income and can help pay for necessary business expenses like payroll and rent if a covered loss occurs. Best of all, business income insurance is already included in a Business Owner’s Policy (BOP) from The Hartford.
What Does BI Insurance Cover?
Business income insurance, or business interruption insurance, helps with your loss of income while you’re recovering from a covered loss that caused damage to your small business’ physical property, resulting in the need to temporarily shut down your business operations. Covered losses include:
- Incendio
- Robo
- Viento
Some costs that business income insurance can help pay for include your:
- Employee’s wages and payroll
- Loss of income during the period of restoration
- Necessary extra expenses, like rent payments for a temporary location
Business income insurance doesn’t cover the following:
- Broken items resulting from a covered event or loss.
- Flood damage, which you’ll need a separate policy for.
- Undocumented income that’s not listed on your business’ financial records.
- Utilities, because they’re usually turned off when your business closes due to damage.
Frequently Asked Questions About Business Income vs Business Interruption
Is Business Income the Same as Loss of Income?
is the same type of protection as business income insurance o business interruption insurance. It can help replace lost income if your small business can’t open temporarily after a covered loss, like property damage.
How Is Business Income Calculated for Insurance?
Small business owners can follow these simple steps to calculate your business income for insurance:
- Calculate your total revenue. This includes all items and services you sell.
- Subtract your business’s expenses, cost of goods sold and operating costs from your total revenue. This calculates your business’s earnings before tax.
- Deduct taxes from this amount to find you business’s net income. Your net income will be your business income.
The equation for business income is Business income = revenue - expenses
How Much BI Coverage Do I Need?
It can be hard to determine how much business interruption insurance you need because every business is unique. A good rule of thumb is to use your gross earnings and projections to estimate your future profits, which can help determine the right amount of coverage. If your business interruption costs exceed the coverage limit you choose for your policy, you’ll have to pay out of pocket for the extra expenses.
Get Business Interruption Coverage
We’re an insurance company with over 200 years protecting businesses from the unexpected. We’re committed to making it easy for small business owners to protect their hard-earned income. That’s why we offer a unique Business Owner’s Policy (BOP) with business income coverage to keep your business fully protected. To get started, obtener una cotización for business insurance from The Hartford today.
Última actualización: 6 de agosto de 2024
Divulgaciones adicionales a continuación.
Business Income and Extra Expense Coverage
Learn how business income and extra expense insurance coverage could help your business survive after a fire, storm, theft or cloud service interruption in this video.