What is the purpose of business interruption insurance?

The purpose of business interruption insurance is primarily to protect against loss of income due to operational disruptions caused by disasters. This type of insurance is specifically designed to support businesses that face interruptions in their operations, which could stem from events such as fire, natural disasters, or other significant incidents that affect their ability to generate revenue.

When a business experiences a disruption, it may still incur expenses such as rent, utilities, and payroll, but it may not be able to operate or earn its normal income. Business interruption insurance helps cover the loss of profits that the business would have generated while it was unable to operate. Additionally, it can also cover ongoing fixed expenses, helping to keep the business financially stable during the recovery period after a disaster.

This type of coverage is crucial for business continuity, allowing companies to navigate through difficult times and maintain their operations and workforce until they resume normal business activities.