phrase · also: BI, business income
business interruption
In plain English
Covers the income you lose and the ongoing expenses you still have to pay while your business is shut down by a covered loss.
If a fire takes out your restaurant, the property policy rebuilds the building. Business interruption replaces the income you would have made while it was being rebuilt — payroll, rent, profit. Without BI, even a well-insured property loss can sink the business.
What it covers
Net income (profit + continuing expenses) the business would have earned during the period of restoration, plus extra expense to keep operating from a temporary location.
What it does not cover
It is NOT triggered by every closure. The cause has to be a covered property peril — fire, wind, hail, etc. Pandemic-related closures generally were not covered by standard BI forms.
Where it trips people up
The waiting period (often 72 hours) and the period of restoration (capped, often 12 months) are critical. So is the documentation — you need solid books to prove your pre-loss income.
The technical version
Coverage for the actual loss of business income sustained, plus extra expense incurred, due to the necessary suspension of operations during the period of restoration following a covered cause of loss.
Worked example
A restaurant with $1.2M annual revenue and a fire in February.
- Fire
- Kitchen totaled. Building closed.
- Restoration
- 5 months to rebuild and reopen
- Lost income
- 5 mo × $100K avg monthly net = $500K
- Continuing expenses
- Lease, manager salary, loan payments
The result. BI pays the $500K of lost net income plus the continuing expenses, replacing the cash flow during the closure. Without BI, the restaurant likely closes permanently — most small businesses can't carry six months of fixed costs without revenue.