Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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business income insurance

Those who own or operate a business may wonder whether they should add on business income insurance to their insurance coverage.

In today’s uncertain financial world, the answer is probably yes for most business owners. Understanding exactly what business income insurance is will be the first step to finding the company that can give you the best policy. Business income insurance may also be known as business interruption insurance.

Compare business insurance rates by entering your zip code into our quote comparison tool above. Save time and money when purchasing a business income insurance policy by comparing quotes online!

Explanation of Business Income Insurance

Business income insurance does very much what disability insurance does. It helps to protect the income stream of a business in the event of a catastrophe. This may be because of a fire, tornado or other natural disaster. In these events, you may have to shut down your business for a while because the business is no longer useable or safe. You may even need to relocate.

In some cases, the company may have to shut down for three to six months or longer because of the event. Would you be able to afford the loss of revenue while your business is closed?

For most businesses, especially smaller, family owned ones, the answer is no. Business income insurance is designed to cover the expected income the business would make had the catastrophe not occurred. It is a very important coverage that most businesses should have, as one never knows when a disaster may strike.

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What Does this Insurance Cover?

Before you choose to buy business income insurance, it is important to understand just what it will cover. While every insurance company varies, business income insurance generally covers the following:

– Profit

The profit your business would have made had the property not been damaged. This profit is based off of your financial records.

– Utility Expenses

Utility expenses that may still be needed, such as electricity or gas, even if the rest of the business is at a standstill.

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– Extra Expense

Many insurance policies also offer coverage for expenses that occur from working from a temporary location as the original business is being restored. This is sometimes known as “extra expense” coverage. This covers the rent of another place, equipment leasing, and the cost it takes to restore databases.

– Payroll

Payroll is also covered. This is an optional coverage that is not always included with business income insurance, but it may be a crucial one. This coverage will pay your employees even though they are not able to work for you. This helps to keep your employees from taking other jobs while they wait for the business to be rebuilt.

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If new employees are necessary because old ones found new employment, training will also be needed, so this coverage can ultimately actually work with you to keep training costs down.

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Who Should Purchase this Coverage?

Any sort of business that operates out of a physical location that has equipment, machinery, tools, computers and more that are important for transacting a business should have this coverage. Consider this- if any damages to your business results in the inability to bring in a profit, this insurance is essential.

purchase business income insurance

Business income coverage insurance is generally triggered when the policy holder files a property loss claim on their insurance. It is important that you work with an agent who is familiar with this type of insurance, as you must sit down and find the right coverage limits that your business needs.

You may wish to go over your limits on a year-to-year basis, especially if your business is growing and profits are increasing. While you may pay a bit more in coverage per year, you will be glad you did in the event of a disaster.

Considerations to Keep in Mind

This type of policy is not one that is sold on it’s own. It can be added onto a property insurance policy, as well as added in on a package policy. Talk to your agent about how to start yours, and consider the following:

  • Be sure that your particular policy gives you and your business enough time to rebuild after you have closed down or temporarily relocated. Unexpected problems may arise, and it can take more time than you think to get your business up and running again after a disaster. This is especially true if it is one that affects many people, such as a tornado. Usually, you will have a 48-hour waiting period before your coverage begins after filing a claim for it.
  • Your specific policy will be related to the actual risk of a fire or any type of natural disaster. Different factors will determine the risks, such as where your business is located, what your business is, and if your company could operate from a temporary location easily.

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Choose a Comparison Website for Your Policy

Now that you understand exactly what business income insurance is, it will be time to look for a company that can offer it to you. Comparing insurance quotes online can be the best place to look, and since there are so many insurance agencies available, you may be confused as to where to look first. A comparison website will be your best bet, as you can get multiple quotes at once.

Instead of dedicating hours to calling multiple companies, or re-writing the same information on various websites, choose a comparison website that will do all the legwork for you.

When you use a free comparison quotes website, you will only need to put your information in one time. From there, the website will show you different companies and their offers, so you don’t have to spend valuable time searching around yourself. You can browse all the top insurance companies from the comfort of your own home, with all the work done for you. Once you find a company you think you want to deal with, you can click on the link provided to you already, and start your policy right then and there. It’s simple and easy, and saves you a lot of valuable time.

Don’t Wait Until It’s Too Late

Use the services of a comparison insurance website to get the best quotes on business income insurance, so your business is not left out in the cold in the event of a catastrophe. Remember, according to the Insurance Information Institute, over 25 percent of businesses that have to be closed because of a catastrophe do not reopen. Don’t be a part of that statistic- look to a comparison insurance website today to get the insurance that your company needs.

Enter your zip code below to compare quotes and find the best rates on business income insurance!