Why most BI claims underpay
Coinsurance: if you carry $250K of coverage but the formula says you need $500K, the insurer pays only half your claim. Second trap: the 'period of restoration' ends at physical repair — but your customers took 6 months to find you again. Extended-period endorsements and accurate worksheets fix both.
- • BI is triggered by covered property damage — pandemic closures were largely excluded.
- • Contingent BI covers losses when a key SUPPLIER or customer burns down.
- • Service businesses can often work remotely — need less limit; manufacturers need the most.
FAQ
How much business interruption coverage do I need?
Months of realistic downtime × (monthly gross profit + monthly continuing expenses). For most businesses that's 6–12 months — a fire rebuild with permitting routinely takes 9.
Does business interruption cover pandemics?
Standard policies require direct physical damage to insured property, and most now carry explicit virus exclusions. COVID-era claims were overwhelmingly denied. Specialized parametric products exist but are niche.
Is business interruption insurance worth it?
At roughly 0.4% of the limit per year, a $500K limit costs ~$2,000/yr. Given that a quarter of businesses never reopen after a major uninsured loss, it's among the highest-leverage coverages a physical business can buy.
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Written by Sam Doshi and the RevenueLab editorial team. We don't sell the data feeds this tool is built on.
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