Business interruption insurance (also known as business income insurance) covers the loss of income that a business suffers after a disaster while its facility is being rebuilt. A property insurance policy only covers the physical damage to the business, while the additional coverage allotted by the business interruption policy covers the profits that would have been earned. This extra policy provision is applicable to all types of businesses, as it is designed to put a business in the same financial position it would have been in if no loss had occurred.
This policy can also be taken complementary to a basic property policy like Fire and Allied Perils, Property All Risk or Machinery Breakdown.
Careful consideration needs to be given while selecting the sum insured (also known as estimated gross profit) to ensure that all necessary components have been included. The period of interruption for which the policy would pay also needs to be decided on carefully. Based on the nature of ones' business this cover can be tailored through a commercial property policy, through a business owner’s policy and through a separate business interruption policy.