Business Income Coverage

Business Income and Extra Expense Coverage

Business Income with Extra Expense coverage is a form of insurance that provides financial protection against loss of income when a business experiences a physical loss or damage to their building, inventory, or equipment. The most common types of losses associated with a Business Income insurance claim include fire, theft, vandalism, and storms.

Business income insurance helps business owners replace lost revenue when their business is temporarily shut down.

What is Business Income and Extra Expense Coverage?

Business Income coverage is designed to help a business resume operations or even continue operations while the damage is being repaired or replaced. The insurance policy pays for fixed business expenses such as payroll, benefits, and it replaces lost the lost revenue for the business owner. Most policies will also pay for the rental costs associated with a temporary business location if the primary location is not usable.

Business Income and Extra Expense Insurance steps in when a business suffers a physical loss within their operation.

Business Income and Extra Expense is an optional add-on coverage to business property insurance. Business Income insurance reimburses the business for lost revenue. Extra Expense insurance reimburses the business for expenses incurred such as rent for a temporary location. Most BOP Insurance policies offer a minimal amount of Business Income and Extra Expense coverage.

Commonly Covered Under a Business Income Policy:
  • Business profits that would have been earned
  • Fixed costs that are still being incurred by the property
  • Temporary location needed to conduct normal business operations
  • Coverage for government mandated closures such as curfews or civial ordinance
  • Extra expenses beyond fixed costs to allow the business to continue operations
  • Business Income Insurance and Waiting Periods

    Most polices for Business Income and Extra Expense do not have an insurance deductible like property and commercial auto insurance. However, they generally have a waiting period before coverage is triggered and effective. Waiting periods often range from 24 hours – 72 hours from the time the damage begins affecting the business. Once the waiting period has been met, the policy kicks in and begins coverage for the period of restoration.

    The Business Income policy will generally pay the difference between the income earned during the period of restoration and normal average income the business would have earned had there not been a physical loss. Coverage can last for a year or more depending on the terms of the policy.

    Companies Who May Benefit From Business Income Insurance:
  • Retail Stores
  • Restaurants
  • IT Companies
  • Payroll Services
  • Real Estate Agents
  • Mortgage Brokers
  • Law Firms
  • Day Cares
  • Medical Offices
  • Beauty Salons
  • Florists
  • Auto Repair Shops
  • HVAC Companies
  • Janitorial Services
  • Contractors
  • Business Income and Extra Expense Insurance Quotes

    General liability Shop offers affordable quotes for Business Income insurance. Our national agency represent more than 35 insurance companies specializing in general liability and business small insurance. We shop your Business Income so you don’t have to.

    Contact one of our commercial liability Specialist today at (800) 900-8657 to see if your business qualifies for affordable an affordable umbrella policy. Or get started with an online quote.

    Call 800-900-8657 to Speak to an Agent or
    Have Us Contact You Start Your Quote Process
    Get an Instant Online Quote
    Additional Endorsements for Business Income Coverage

    Business Income insurance is the primary coverage purchased and it helps a business owner stay in business after their building or inventory is damaged or destroyed. Mot insurance companies offer optional coverages which help expand the policy and coverage. The endorsements include:

    Extra Expense Coverage

    Extra expense coverage generally does not have a waiting period like business income insurance. This insurance covers the extra expenses incurred during the period of restoration. It includes most money paid to minimize the suspension of normal business operations.

    Extended Period Coverage

    An extended period indemnity provides additional time for a business to make up for lost customers after the period of restoration is over. Generally, this coverage can add an additional year or two of protection beyond the normal business income policy.

    Loss of Rents

    Loss of rent coverage is typically purchased by business owners who own commercial property and lease part of it to other businesses. The coverage will provide income to offset the lost rent until tenants can resume occupancy.

    Rental Value Endorsement

    A rental value endorsement helps business owners with favorable lease rates when they have to pay higher rent for a new or temporary location.

    Business income insurance is also known as Business Interruption Insurance. The coverage is different than property insurance because property coverage only covers the physical damage to the business. Business income coverage is designed to provide similar profits to a business as they would have earned prior to a disaster. In other words, it helps make the business owner whole after a physical loss.
    Add business income and extra expense coverage to your general-liability-insurance policy.

    Example of Business Income Coverage

    A small organic grocery store is extensively damaged by a storm. The necessary coolers and refrigeration equipment are rendered unusable. All stock and inventory is ruined. The owner submits a claim to his property insurance company and a check is cut to replace his equipment and inventory. A contractor is hired to do the repairs but will be delayed for several weeks do to the high demand for contractor related services due to the storm. The refrigeration equipment must also be special ordered and will take up to 45 days before delivery.

    The owner of the store has a mortgage on the building and payroll commitments to his staff. He also has contracts in place that require him to purchase a minimal amount of inventory from his largest supplier on a monthly basis. The expected time it will take to have his business fully operational again is estimated to be about 3 months.

    A business income and extra expense insurance policy would step in to help make the business owner financially whole again after the loss.

    If the owner has business income insurance, the insurance will cover the amount of lost revenue based on the store owners previous financial records. This will allow him to make his mortgage payments and meet payroll obligations. If the business owner has extra expenses coverage, the policy would help the owner open up earlier in a temporary location and pay for renting coolers and other supplies.

    A lot of small business owners fail after a disaster strikes their business. Business income and extra expense coverage helps business owners recover after a major loss.

    Business owners looking for Business Income and Extra Expense insurance often benefit from purchasing a BOP policy with desired limits endorsed on the policy for Busines Income insurance.

    Learn more about a Business Owners Policy.