A plain-language guide for small-business owners: how business income and extra expense coverage typically work after a covered property loss, and how to document lost income.
When a fire, wind and hail storm, burst pipe or other covered loss damages your business property, the repair bill is only part of the cost. You may also lose income while you are closed or operating at reduced capacity, and spend extra money to keep serving customers.
Business interruption coverage, usually called business income and extra expense coverage, is designed to address that. It is typically part of a commercial property or business owner's policy (BOP), but it has rules that small-business owners often don't see until they need it.
Business interruption claims typically follow a covered physical loss, such as:
In a business interruption claim, the "damage" is financial as well as physical. Watch for:
Depending on your policy, business interruption coverage typically includes:
Business income claims usually run alongside the property claim and can take longer, because the loss continues until the business recovers. Check your policy for proof of loss requirements and any deadline to file a lawsuit, and ask your insurer to confirm deadlines in writing.
As licensed public adjusters, we work for policyholders. On a business interruption claim we typically coordinate the property damage claim with the income claim, work with your accountant on the numbers, document the period of restoration and extra expenses, and negotiate with the insurer.
Learn more about our public adjusting services and consulting and estimation services, or see when a claim consultant can help. If your claim is underpaid, see denied and underpaid claims.
Texas, Louisiana and Mississippi: Each state sets rules for how quickly insurers must acknowledge, investigate and pay claims. Coastal businesses should check whether wind damage is covered under the commercial policy or a separate wind policy, because the business income coverage generally follows the property coverage.
These notes are general. Your policy and current state law control.
It is coverage, usually called business income and extra expense, that pays lost net income and continuing expenses when a covered property loss forces a business to close or slow down. It is typically part of a commercial property policy or business owner's policy.
Many policies have a waiting period, often around 72 hours, before lost income is covered. This is a common baseline only. Your policy may set a longer waiting period, so check your declarations and coverage form.
Typically for the "period of restoration": the time it should reasonably take to repair or replace the damaged property, sometimes followed by a limited extended period while revenue recovers.
Usually prior years' profit and loss statements and tax returns, recent monthly sales, payroll records, a list of continuing expenses and receipts for extra expenses.
Usually only if the flood itself is covered. Flood (outside water entering the building) is typically excluded from standard commercial property policies and is usually covered by a separate flood policy, often through the NFIP, so related income loss is typically excluded too. We do not handle NFIP flood claims. If your policy includes flood coverage by endorsement, we can review the related business interruption claim like any other covered loss.
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We work for policyholders, not insurance companies. Contact us to talk through your claim and your policy. Call 877-5APC-247 (877-527-2247) or email claims@allperils.com.
This guide is general information, not legal advice. Every claim is different, and coverage depends on your policy language, the facts of your loss and current state law. All Perils Consulting is a public adjusting firm licensed in Texas (#3296354) and Louisiana (#1207216); Mississippi claims are handled under Barry Van Shoubrouek's individual public adjuster license (#10768959). We are public adjusters, not attorneys. For legal questions, consult a licensed attorney.