What triggers business interruption coverage?

Covered physical damage to insured property that suspends operations. Most forms require the physical damage element.

How is lost income calculated?

From historical revenue and expenses, adjusted for trend and seasonality, minus expenses that ceased during the shutdown, plus extra expense incurred to mitigate.

Is there a waiting period?

Many commercial forms include a waiting period, often 24 to 72 hours, before business income coverage begins.

Does it cover the whole recovery?

Coverage runs through the period of restoration, sometimes with a limited extended period of indemnity after reopening. It rarely covers a full return to prior revenue.

What Is Business Interruption Insurance?

Business interruption insurance replaces lost net income and continuing fixed expenses while covered physical damage suspends your operations. The claim runs through the period of restoration - from the loss until the property should be repaired with reasonable speed - and is built from historical financials adjusted for trend and seasonality, less expenses that stopped, plus extra expense to keep operating. It requires financial proof: profit and loss statements, tax returns, payroll, and sales reports. Call 516-410-0164 for a free claim review.

5 min to read

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Written by: Kevin Godfrey, President, Long Island Public Adjusters, LLCNYS Public Adjuster License #: PA-1156995

Key takeaways

•Business interruption pays lost net income plus continuing fixed expenses, not gross revenue.
•The period of restoration ends when repairs should reasonably be complete, not when sales recover.
•Financial records - P&L, tax returns, payroll, sales exports - are the evidence that decides the number.

Featured article image of a public adjuster assisting a homeowner

The short version

Business interruption coverage replaces the income your business would have earned, plus continuing fixed expenses, during the period your operations are suspended by covered physical damage to your property. It is one of the most commonly underpaid parts of a commercial claim because it requires financial proof, not just photographs.

What it typically pays

Lost net income you would have earned
Continuing fixed expenses: rent, loan payments, insurance, key payroll
Extra expense to keep operating - temporary location, equipment rental, expedited shipping
Sometimes payroll retention for key staff, depending on the form

The period of restoration

Coverage runs from the date of physical loss until the property should be repaired with reasonable speed - not until business returns to prior revenue levels. Many forms add an extended period of indemnity for a limited window after reopening.

How the number is built

Historical revenue and expense data, usually 24 to 36 months
A trend and seasonality adjustment for what the period would have produced
Subtract expenses that stopped during the shutdown
Add extra expense incurred to mitigate the loss
Apply any coinsurance, waiting period, or monthly limit provisions

Documentation you will need

Profit and loss statements and tax returns
Monthly sales reports and point of sale exports
Payroll records
Vendor and lease agreements
Booking or order records showing cancelled business
A written reconstruction timeline

Pro tip:

Ask your accountant for a same-period prior-year comparison in the first week. Reconstructing the numbers months later is far harder and weaker.

What is commonly disputed

Waiting period application, whether the shutdown was caused by covered physical damage, the length of the restoration period, and whether payroll was properly a continuing expense.

Restaurants, retail, and multi-tenant buildings

Food service losses add spoilage, license timing, and reopening cost issues. Landlords should look at loss of rents rather than business income.

Long Island Public Adjusters prepares business interruption claims for Nassau and Suffolk County commercial property owners. Call 516-410-0164 for a free claim review.

For official guidance on property insurance and claim rights, visit the New York State Department of Financial Services.

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