Business interruption insurance cost

Business interruption insurance (or business income coverage) helps pay for lost income, loan payments, operating expenses (including lease payments), and relocation costs when your small business is forced to temporarily shut down due to a covered peril.

Covered perils include fires, flooding, and other physical damage covered by property insurance. Pandemics are an exclusion, as business interruption coverage does not protect against lost revenue from communicable diseases.

The cost of adding business interruption coverage to your commercial property insurance or business owner's policy (BOP) varies significantly based on the scope of your business and your liabilities.

If your business owns valuable commercial property, operates in a high-risk industry, or earns significant revenue, you’ll need to pay more for business interruption insurance. If you operate a small, low-risk business, coverage will cost much less.

A number of factors will impact the cost of business interruption coverage.

Your insurance provider will look at the value of your business property and your type of business when calculating your premium, and you can choose a deductible and policy limits that fit your budget.

If you want business interruption insurance with a higher policy limit, you’ll end up paying a higher insurance premium.

When you add business interruption insurance to your commercial property insurance or business owner’s policy, you can scale coverage to fit your business.

For more coverage, you can add endorsements to your business interruption insurance policy, such as extra expense coverage and contingent business interruption insurance.

When property damage forces your business to close or move to a temporary location, business interruption insurance covers the cost of rent or relocation until you can reopen.

If you own or rent valuable commercial property, your business interruption insurance premiums will be higher, but so will your payout if your business is forced to shut down.

If you work in an industry where an interruption would result in bigger financial losses, you’ll probably have to pay more for business interruption insurance.

For example, a restaurant will likely pay a higher insurance premium than a law firm because restaurants depend on a physical location to bring in customers, and have a higher risk of insurance claims arising from fires and other disruptions.

Because business interruption insurance compensates businesses for income loss during a temporary shutdown, businesses with higher revenue tend to pay higher premiums. While these businesses pay more for coverage, they also receive more compensation.

The deductible you choose impacts the cost of your business interruption coverage. The higher your deductible is, the less expensive your premium will be.

Selecting a more costly deductible is an easy way to save on your premium, but be sure to choose one that you can still afford. If you can’t pay your deducible, you can’t collect on a claim.

Insurance companies will consider your claims history to determine how risky you are to insure. Companies that have made past business interruption claims will pay more for insurance than those with a clean history.

Your insurance provider will also take your geographical location into account when calculating your insurance premium.

If your business property faces environmental risks, such as natural disasters like windstorms or tornadoes, your premium may be higher. Land value and local laws can also affect insurance costs.

A period of restoration refers to how long your income losses are covered by your business interruption policy. It begins after a waiting period that’s usually 24 to 72 hours after your business is forced to close. It ends when the covered damage is repaired, or reasonably could’ve been repaired.

Business interruption insurance offers financial protection when your small business experiences a covered loss under your property insurance policy. Examples include vandalism, fires, and other direct physical losses.

It’s easy for small business owners to save money on business income insurance without compromising on coverage.

A few strategies to keep costs down include:

Businesses sometimes get discounts when they purchase multiple commercial insurance policies from the same provider. For example, if you own a small, low-risk business, you may qualify for a business owner’s policy.

A BOP bundles general liability insurance and commercial property insurance together at a reduced rate – and you can add business interruption insurance as an endorsement. If you don’t qualify for a BOP, then you can add business interruption coverage as an endorsement to your commercial property insurance policy.

Insurance companies usually let you choose between an annual payment or smaller monthly payments, with a discount for the annual payment.

Claims on your insurance make your premium go up. You should try to reduce and prevent all types of risks to avoid claims and keep your premium down.

A good risk management plan includes preparation for severe weather and implementation of fire prevention protocols. Installing sprinkler systems and fire alarms can help reduce insurance costs, too.

Insureon is the #1 independent agency for online delivery of small business insurance. We help business owners compare coverage options from top-rated providers, buy policies, and manage their insurance online.

By completing Insureon’s easy online application today, you can compare free insurance quotes for business interruption insurance and other types of insurance from top-rated U.S. providers. Insureon insurance agents are available to help answer any questions related to your business needs.

Once you find the right policy, you can begin coverage in less than 24 hours and get a certificate of insurance for your small business.

Insurance premiums vary based on the type of coverage and the number of policies you need. See our small business insurance cost overview or explore costs for a specific policy.