{
  "slug": "business-interruption-coverage",
  "title": "Business Interruption Coverage Calculator",
  "heading": "Business Interruption Insurance Calculator",
  "category": "financial",
  "url": "https://www.revenuelab.fyi/toolbox/business-interruption-coverage",
  "summary": "Size the coverage limit you need to survive a shutdown until you reopen.",
  "description": "Business interruption (BI) insurance replaces lost net income and covers continuing fixed expenses while your business can't operate after a covered loss like a fire or major equipment failure. Sizing it wrong is one of the most common and costly mistakes — insureds routinely underestimate the restoration period, leaving them exposed after the money runs out. This calculator takes your monthly net income, monthly fixed operating expenses that continue regardless of revenue (rent, loan payments, key salaries), and an expected number of months to restore operations including permitting and rebuild time, then adds a contingency buffer since most restoration timelines run long.",
  "formula": "Coverage need = (monthly net income + monthly continuing fixed expenses) × restoration months × (1 + contingency %).",
  "dateModified": "2026-09-30",
  "run_url": "https://www.revenuelab.fyi/api/public/calc?tool=business-interruption-coverage",
  "inputs": [
    {
      "id": "monthlyNetIncome",
      "label": "Average monthly net income",
      "kind": "number",
      "hint": null,
      "default": 25000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "fixedExpenses",
      "label": "Monthly continuing fixed expenses",
      "kind": "number",
      "hint": null,
      "default": 18000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "restorationMonths",
      "label": "Expected restoration period",
      "kind": "number",
      "hint": null,
      "default": 6,
      "unit": "months",
      "min": 1,
      "max": 36
    },
    {
      "id": "contingency",
      "label": "Contingency buffer",
      "kind": "number",
      "hint": null,
      "default": 25,
      "unit": "%",
      "min": 0,
      "max": 100
    },
    {
      "id": "extraExpense",
      "label": "Extra expense (temp location, rush costs)",
      "kind": "number",
      "hint": null,
      "default": 15000,
      "unit": "$",
      "min": 0,
      "max": null
    }
  ],
  "outputs": [
    {
      "id": "totalNeed",
      "label": "Recommended BI coverage limit",
      "format": "currency",
      "hint": null,
      "primary": true
    },
    {
      "id": "baseNeed",
      "label": "Base need (no buffer)",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "monthlyLoss",
      "label": "Total monthly loss exposure",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "dailyLoss",
      "label": "Daily loss exposure",
      "format": "currency",
      "hint": null,
      "primary": false
    }
  ],
  "worked_example": {
    "inputs": [
      "Average monthly net income: 25000 $",
      "Monthly continuing fixed expenses: 18000 $",
      "Expected restoration period: 6 months",
      "Contingency buffer: 25 %",
      "Extra expense (temp location, rush costs): 15000 $"
    ],
    "outputs": [
      "Recommended BI coverage limit: $337,500",
      "Base need (no buffer): $258,000",
      "Total monthly loss exposure: $43,000",
      "Daily loss exposure: $1,414"
    ]
  },
  "how_to": {
    "title": "How to use this",
    "steps": [
      "Enter average monthly net income ($).",
      "Enter monthly continuing fixed expenses ($).",
      "Enter expected restoration period (months).",
      "Enter contingency buffer (%).",
      "Enter extra expense (temp location, rush costs) ($).",
      "Read your recommended bi coverage limit on the right — it updates as you type.",
      "Hit Share to keep the scenario or send it to someone."
    ]
  },
  "scenarios": [
    {
      "name": "Conservative",
      "description": "Lower-end numbers — what if things land soft?",
      "values": {
        "monthlyNetIncome": 15000,
        "fixedExpenses": 11000,
        "restorationMonths": 4,
        "contingency": 15,
        "extraExpense": 9000
      }
    },
    {
      "name": "Typical",
      "description": "Defaults — the most common real-world setup.",
      "values": {
        "monthlyNetIncome": 25000,
        "fixedExpenses": 18000,
        "restorationMonths": 6,
        "contingency": 25,
        "extraExpense": 15000
      }
    },
    {
      "name": "Ambitious",
      "description": "Higher-end numbers — what if things really pop?",
      "values": {
        "monthlyNetIncome": 40000,
        "fixedExpenses": 29000,
        "restorationMonths": 10,
        "contingency": 40,
        "extraExpense": 24000
      }
    }
  ],
  "limitations": [
    "Results are estimates before tax, fees, and inflation unless an input explicitly covers them.",
    "Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.",
    "This is educational maths, not financial advice. Check anything contractual with the lender or your accountant."
  ],
  "faq": [
    {
      "q": "What counts as 'continuing fixed expenses'?",
      "a": "Rent or mortgage payments, loan payments, insurance premiums, and salaries for key employees you must retain to reopen — anything that keeps coming due whether or not you're generating revenue. Variable costs tied directly to sales, like materials and hourly staff you'd lay off, typically don't belong in this bucket since they'd naturally drop during a shutdown."
    },
    {
      "q": "Why add a contingency buffer to the restoration period estimate?",
      "a": "Actual rebuild timelines routinely exceed initial estimates because of permitting delays, contractor availability, supply chain issues for materials or specialized equipment, and inspection cycles. Insurers and risk consultants commonly recommend adding 20–50% to your best-guess restoration timeline, which is why this calculator defaults to a 25% buffer."
    },
    {
      "q": "What's the difference between business interruption and extra expense coverage?",
      "a": "Business interruption replaces the net income and fixed costs you lose while shut down. Extra expense covers additional costs you incur specifically to keep operating or reopen faster — renting temporary space, expediting equipment shipping, or paying overtime. Most policies bundle both, and this calculator includes a line for extra expense so you size the full picture."
    },
    {
      "q": "Does business interruption coverage have a waiting period?",
      "a": "Yes, typically a 24-, 48-, or 72-hour deductible period (sometimes called a 'time deductible') during which no loss is paid, similar to how a dollar deductible works on property coverage. Shorter waiting periods cost more in premium, so match it to how much cash reserve you'd have on hand to bridge that gap."
    }
  ],
  "related": [
    "https://www.revenuelab.fyi/toolbox/commercial-general-liability-rate",
    "https://www.revenuelab.fyi/toolbox/cyber-liability-limit-sizing"
  ],
  "license": "CC-BY-4.0",
  "citation": "RevenueLab — Business Interruption Coverage Calculator (https://www.revenuelab.fyi/toolbox/business-interruption-coverage)"
}