Business income coverage explained
Business income insurance coverage keeps your business running if your physical location is damaged to the extent that it keeps you from serving customers and making money.
It’s hard enough being a small business owner when everything is going swimmingly. A disaster or an accident that forces you to temporarily shut down can completely sink your finances. Business income insurance gives you a financial life preserver when a physical loss puts your business in rough waters.
Business income insurance protects your business from unexpected loss of income if physical damage to your property prevents you from operating for an extended period of time.
Business income insurance coverage keeps your business running if your physical location is damaged to the extent that it keeps you from serving customers and making money. The causes of loss can include damage from a fire, vandalism, or a covered natural disaster.
We’re the first to admit it — insurance is confusing! To help navigate your policy, here’s a quick and easy glossary on business income insurance terms.
Business income insurance covers various expenses while your business is shut down or impacted by a direct physical loss, such as:
Business interruption insurance will typically cover losses incurred during the “restoration period.” The restoration period is how long it takes to get back to normal business operations. For example, if you own a hairstyling business and fire damages your salon, you won’t be able to work there until your building and your styling equipment are restored.
Your BOP will cover income lost because you can’t serve your customers without a safe location. It could also cover the costs of paying your salon receptionist while you’re out of commission, continued costs such as rent and utilities and discrepancies between your normal revenues and what you make while you’re re-establishing your business after the loss. It can also help pay for your relocation to another salon while repairs are being made to your damaged location.
Business income insurance coverage covers income loss related to physical property damage. However, it doesn’t necessarily include business slowdowns or shutdowns due to intangible causes.
For example, many businesses shut down or saw lighter traffic because of the pandemic. However, because COVID-19 did not inflict physical damage (like the loss of a building or facility) on the business, it would likely not be a covered situation. You may, however, benefit from BOP coverage if your business closes because of a mandatory government-enforced shutdown or lockdown. Furthermore, some insurers have updated their policies to include pandemic clauses.
It’s also important to understand that business income insurance coverage doesn’t cover the costs to repair or replace your damaged business property — for that, you need commercial property insurance (also included in a BOP). Business income insurance covers additional losses in revenue that come from your small business not being operational.
If water damage ruins your bakery supplies and causes mold to grow in the kitchen, your business income insurance will cover the loss of income as you look for a new or temporary kitchen to run your business and meet your orders. It can also cover the reductions in revenue because you’ve moved out of range of your regular customers and your temporary location has less foot traffic. However, business interruption insurance won’t necessarily cover the cost of restocking the flour and butter.
Thimble’s BOP policies include business income insurance (also called business interruption insurance). When you secure your BOP coverage, you’ll automatically have these valuable safeguards in place.
You can quickly and easily get a quote for a BOP policy through the Thimble app or website. Enter your location and a few details, and you can be covered in minutes.
As a business owner, it can feel like you’re always trying to stay one step ahead to keep your business financially viable and thriving. Business income insurance, included in your Thimble BOP, can give you a little extra slack on the life preserver.