Commercial coverage that reimburses a business owner for lost profits and continuing fixed expenses during the time that a business must stay closed while the premises are being restored because of physical damage due to a covered peril, such as fire. Business interruption insurance may also cover financial losses that occur if civil authorities limit access to an area after a disaster and their actions prevent customers from reaching the business premises. Depending on the policy, civil authorities coverage may start after a waiting period and last for two or more weeks.Two other forms of coverage are commonly added to business interruption policies:
Similar to the additional living expense coverage in the homeowners policy, extra expense covers the additional expenses associated with continuing operations at a different location when the primary location has been damaged by a covered peril. For example, most state laws require banks to remain open on most business days. If a bank were to burn, it would need to open again as soon as possible at a temporary location.
Extra Expense
Contingent Business Interruption
This coverage includes damage due to an insured peril to a firm’s customers, suppliers, or anchor stores. For example, if an automobile parts manufacturer has a long-term agreement to supply parts to a local Toyota plant and that plant ceases production because of a fire, the contingent business interruption coverage for the supplier would cover lost profits. Anchor store coverage protects small retailers who locate in a shopping center with a supermarket or other anchor store. If the anchor store is damaged by an insured peril, the smaller retailer is compensated for the reduced traffic.