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What Is Business Income Insurance Coverage?
Business income insurance coverage is a type of business insurance that helps your company replace lost income if it’s unable to operate due to covered property damage.
Business income insurance acts as business interruption insurance or income protection insurance. For example, if your business is unable to operate and generate revenue due to fire damage, this insurance helps cover your lost income until you can reopen again. This can help you continue to pay your operating expenses, like payroll and monthly bills.
Best of all, business income coverage is already included in a Business Owner’s Policy (BOP). You can easily increase coverage to meet specific risks by choosing from a variety of optional coverages. You can add these coverages as endorsements to your existing Business Owner’s Policy.
What Does Loss of Business Income Insurance Cover?
Your business income insurance coverage pays for your loss of income while you’re recovering from a covered cause of loss. Some costs that business income insurance can help pay for include:
- Mortgage and rent payments
- Employee’s wages and payroll
- Loss of income during the period of restoration
- Loan payments
- Tax payments
Restoration Period
The restoration period for business income insurance begins when your business is physically damaged and you need to shut down. It ends when your property is repaired and ready to reopen. Our standard business income coverage has a zero-hour waiting period, which means coverage goes into effect when there’s a loss.
Business Income Coverage Exclusions
Business income insurance doesn’t include property coverage to help pay for damages. It pays for your loss of income during repairs or replacement of your damaged property. For instance, you’ll need commercial property insurance to help pay the costs of physical damage to your business. Business income insurance also doesn’t help pay for your loss of business income from certain extreme weather events or pandemics.
Who Needs Business Income Coverage?
Business income insurance is important if fire, theft or wind damage can potentially shut down your operation. This policy can help cover your business while you repair or replace your business property. In some cases, you may want to increase your business income coverage by adding endorsements. You can add these endorsements to your existing Business Owner’s Policy (BOP).
You should consider endorsements if your business relies on:
- A physical location
- Equipment
- Other property to generate income
For example, businesses that may need business income insurance endorsements include:
- Software companies that rely on physical and digital property. This includes offices, computers, servers and cloud storage.
- Service businesses, such as hair salons that depend on a physical location and tools to serve customers.
- Retail stores and businesses that need online or brick-and-mortar storefronts to display products.
How Does Business Income Insurance Coverage Work?
We designed this insurance to help protect your business’ income from a variety of risks. If you can’t run your business because of damaged property from fire, theft or wind, this policy can help replace some of the lost income and physical loss.
To ensure our coverage is comprehensive, we offer a broad range of insurance options and extensions. For instance, civil authority coverage can help extend your business income insurance if a covered loss damages your property and a civil authority doesn’t allow you to access your business.
Business Income Extension for Essential Personnel
It can be difficult for businesses to continue operations when employees are unexpectedly absent. If this happens, business income insurance can help cover the cost of lost business earnings. It can also help cover extra expenses resulting from an employee absence. This allows you to continue to run your business.
This coverage is intended to protect your loss of income following damage to the property you use in your business operations and isn’t intended to provide coverage for accidents or illnesses.
Business Income Extension for Off Premises Operations
The risk of damage to equipment and tools may increase when businesses are working at an off-premises jobsite. For example, say you own a construction company and have to stop working when you notice damaged equipment on a jobsite. Business income extension insurance can help cover the resulting lost income. It can also help cover costs for renting replacement equipment.
Business Income Extension for Off Premises Utility Services
This coverage can help cover lost income and additional expenses that result from an interruption in utility services. This includes power, communications and water services that get interrupted.
Business Income for Dependent Properties
Many businesses depend on third parties to operate, like:
- A shipper who delivers products that you need in order to do business with clients
- An anchor store whose customers or employees do business with you
- A manufacturer who builds your product
If a third party is unable to operate due to a covered loss, your business may suffer. Business income for dependent properties can help cover lost business income resulting from a third party that doesn’t deliver products or services your business relies on.
Business Income Extension for Electronic Vandalism
Businesses fall victim to electronic attacks more than you may realize. This extension is an optional coverage to help protect you in case of electronic attacks. For example, say your business’ website gets hacked and you aren’t able to take any orders. This coverage can help pay for the loss in income.
Extended Business Income
Many businesses have trouble regaining their prior level of income after a covered peril or event occurs. For example, say your pet grooming business closes for several weeks due to a covered loss. Upon reopening, you may find that many of your old customers found new pet groomers. Extended business income coverage can help replace the lost income while you build back your business.
Common Questions About Business Income Insurance
What Is Included in Business Income Coverage?
Business income insurance includes coverage to help replace lost income if your business needs to shut down its operations after a loss occurs. It does not include coverage to repair physical damage to your business.
How Do You Calculate Business Income Coverage?
To estimate how much coverage you’ll need, first calculate your yearly business income by subtracting expenses from your total revenue. You can then use this amount as a reference to project how much income your business will earn within the next year. Once you have that projection, you can then estimate the period of restoration if your business is damaged.
For help calculating your business income coverage, contact The Hartford today.
What Is the Waiting Period for Business Income Coverage?
The Hartford’s standard business income coverage has a zero-hour waiting period. This means that the coverage goes into effect right after a loss.
How Long Is Business Income Coverage?
Business income coverage starts when your business is shut down due to damage and ends when your business is repaired and reopened.
Why Choose The Hartford for Business Income Insurance?
We’ve been insuring businesses for over 200 years. We’re committed to making it easy for our small business customers to help protect their hard-earned income. That’s why we offer you the ability to customize our insurance coverage beyond what’s included in your Business Owner’s Policy (BOP). With us, you can add specific business income coverage endorsements to your existing policy.
You can get additional coverage to address the specific risks that your business faces – all while enjoying the convenience of managing one policy and paying one bill. You’ll also get access to our industry leading customer support and response times.
The best way to find the right coverage is to compare quotes from multiple insurance companies. To get started, get a business income insurance quote online from us today.
More Answers to Frequently Asked Business Income Insurance Questions
Last Updated: May 23, 2023
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