Business interruption insurance replaces lost revenue and covers ongoing fixed expenses when a covered disaster forces your business to shut down temporarily. A fire, hurricane, or major equipment failure can halt operations for weeks — without BI coverage, you'd face both zero revenue and full fixed costs simultaneously. This calculator estimates the minimum coverage your business needs.
Business Profile
Rent, utilities, salaries, loan payments
Coverage Estimate
Standalone BI policies typically cost more. Actual premiums depend on industry, location, and insurer.
How to Calculate Business Interruption Insurance Coverage
Business interruption insurance is one of the most underutilized commercial coverages. Many small business owners discover its absence only after a disaster — when it's too late to purchase it. Understanding how much coverage you need is the first step to protecting your business from a revenue-killing catastrophe.
Step 1: Calculate Your Monthly Revenue and Fixed Costs
Use your average monthly gross revenue (not profit) as the base. Your fixed expenses — rent, utilities, employee salaries, loan payments, insurance premiums — continue even when the business is shut down. A restaurant earning $50,000/month with $20,000 in fixed costs needs coverage for both the $50,000 in lost revenue AND the $20,000 in fixed costs it must still pay.
Step 2: Estimate Outage Duration
Consider how long it would realistically take to restore operations after your worst-case scenario. A retail store destroyed by fire might take 3-6 months to rebuild and reopen. A restaurant might need 4-8 months. Most insurers recommend a 12-month period of restoration as the minimum. Underestimating this is the most common BI coverage mistake.
Step 3: Account for the Waiting Period
The waiting period (typically 24-72 hours) means very short outages aren't covered. Budget for this uninsured gap — a 72-hour waiting period on a $50,000/month revenue business means the first $5,000 in losses are your responsibility. This is separate from and in addition to your property insurance deductible.
Step 4: Consider Extra Expense Coverage
Many business interruption policies include "extra expense" coverage — costs to keep your business operating during restoration (temporary space rental, expedited equipment repair, overtime). This coverage is separate from lost revenue and fixed costs but equally important. Ask your insurer for the extra expense sublimit in any policy you review.
FAQ
Is this business interruption insurance calculator free?
Yes, completely free with no signup required. All calculations run locally in your browser and your data is never stored.
What does business interruption insurance cover?
Business interruption (BI) insurance covers lost revenue and ongoing fixed expenses when a covered peril (fire, hurricane, vandalism) forces your business to suspend operations. It does NOT typically cover pandemics, floods (separate policy), or voluntary shutdowns. Most policies require physical damage to trigger coverage.
How long does business interruption coverage last?
Most BI policies include a 'period of restoration' covering 12 months, though some provide 18 or 24 months. The period begins after the waiting period (typically 24-72 hours after the covered event) and ends when your property is repaired and you can resume normal operations.
What is a waiting period in business interruption insurance?
The waiting period (or time deductible) is the time between the covered event and when BI coverage begins. Most policies have a 24-72 hour waiting period. Unlike a dollar deductible, this means short outages of 1-3 days aren't covered — you absorb those losses directly.
How is the business interruption premium calculated?
BI premiums typically cost $500-$3,000 per year as an add-on to a commercial property policy. Standalone BI policies cost more. Premium factors include your annual revenue, industry risk, location, building construction type, and coverage limit. Many insurers bundle BI with property coverage in a Business Owner's Policy (BOP).
What expenses does business interruption insurance reimburse?
BI insurance reimburses: net profit you would have earned, ongoing fixed expenses (rent, utilities, loan payments, employee salaries), and sometimes extra expenses for temporary relocation. Variable costs like raw materials that you aren't producing are NOT reimbursed since you aren't incurring them during the shutdown.