What does business interruption insurance compensate for?

Business interruption insurance is specifically designed to compensate for lost income that a business suffers when it is unable to conduct its operations due to a covered event, such as a natural disaster or significant property damage. When a business experiences a disruption that prevents it from operating normally, this insurance helps cover the loss of income during the period of interruption, allowing the business to maintain financial stability while it recovers.

Other types of insurance, such as property insurance, cover physical damage to the business's premises and assets, which would be more aligned with options related to property damage. Similarly, medical expenses from employee injuries are typically covered by workers' compensation insurance, and legal costs stemming from lawsuits would fall under a general liability or specific legal expense insurance. In contrast, the purpose of business interruption insurance is solely to address the financial impact of business operations being halted, making lost income the focal point of this particular coverage.