Business Interruption Insurance

Possibly, through civil authority coverage, and the conditions are strict. Civil authority responds when an order of a civil authority prohibits access to your premises. Most forms require that the order followed physical damage to other property from a covered peril, and that the damage occurred within a stated distance of your premises, often one mile. They then pay for a limited number of days after a short waiting period. An evacuation warning with no damage nearby, or a closure ordered for smoke alone, may not meet it. Read the trigger on your own form.

Generally yes. Business interruption coverage responds to lost income and the continuing expenses you still have to pay during a covered shutdown, which commonly includes rent, payroll, and utilities. What it actually pays turns on the policy’s period of restoration, any waiting period, and the income figure used when the limit was set, so those terms are what determine the answer for your business.

It is a time element coverage attached to the property policy, not a policy of its own. On a business owners policy it is usually built in. On a commercial package it is generally scheduled with its own limit, calculated from a business income worksheet. Either way it depends on the property section: if the underlying loss is not covered there, the income loss is not covered here. That is why the exclusions on the property form, earthquake and flood in particular, reach further than owners expect.

For the period of restoration, which is not the same as how long you are actually closed. The clock runs from the date of loss and ends when the property should reasonably have been repaired, rebuilt, or replaced with similar quality, whether or not it actually was. A slow rebuild does not extend it. Two things can extend it. An extended business income period continues for a stated number of days after you reopen while revenue recovers. Ordinance or law time element coverage funds delay caused by code-required upgrades. Both are added, not assumed.

It follows physical damage, which is what rules most of the disappointments out. There has to be direct physical loss or damage to covered property from a covered peril, so a downturn, a lost contract, or a voluntary closure does not trigger it. A precautionary power shutoff is the California version of this problem: with no physical damage to anything, there is generally nothing for the coverage to follow. Utility services endorsements exist, though they usually still require physical damage to the utility’s property. Communicable disease exclusions are now near universal.